El Salvador offers a wide range of incentives to attract foreign investment and drive new commercial and industrial developments. There are no restrictions on foreign ownership, no restrictions on mergers, acquisitions or joint ventures.

There are three specific laws in El Salvador that seek to foster foreign investment by improving the country’s competitiveness in all areas of action. These laws are called the Investment, Industrial and Commercial Free Zone and Export Reactivation Laws.

The Investment Law grants equal conditions for national and foreign companies. The aim is the avoidance of unjustified and/or discriminatory measures that could work against normal activities for foreign investment.

The Industrial and Commercial Free Zone Law grants companies the following incentives:

  • Income tax exemption.
  • Value added tax exemption.
  • Municipal tax exemption.
  • Exemption from real estate transfer taxes
    when land is intended to be used for productive activities.
  • Exemption from duties for imports on machinery, raw materials,
    equipment and intermediate goods used for production.
  • Option to sell all or part of production to local or Central American market.
  • Any foreign company may establish and function in a free zone or bonded warehouse if they are engaged in:

    • Production, assembly, manufacturing, processing, transformation,
      or commercialization of goods and services; and/or
    • Rendering of services linked to international or regional trade,
      such as gathering, packaging and repackaging, cargo consolidation, distribution of merchandise
      and other activities connected or complementary to them.

The Export Reactivation Law grants the following incentives:

  • Reimbursement of 6% FOB value of exports destined outside the region
  • Levies no export taxes
  • Custom duties exemption for the importation of raw material and intermediate goods
    for partial or temporary offshore assembly operations.
  • Companies in the offshore assembly industry that export, trade, and manufacture goods
    and services in a partial or temporary time span will enjoy tax exemption on property
    in a percentage equal to the value of the exports.

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Download Investment Laws