Law for the Promotion of Innovation and Technological Manufacturing in El Salvador

A few days ago the president of our country announced through his Twitter account the sanction of the Law for the Promotion of Technological Innovation and Manufacturing in El Salvador. It was published in the Official Gazette number 81, Volume 439 dated May 4, 2023 and came into force on June 5.

This Law seeks to position El Salvador as a Technological Operations Center and contributes to economic growth and development through innovation and technology manufacturing in the country, by offering incentives for investment, projecting El Salvador as a reference in technology. , not only in Central America but also in Latin America.

The country currently offers a workforce of 2.9 million people aged 40 or younger, being a job offer capable of developing new skills in a short time and being attractive to new investors in technology. The Salvadoran workforce is described as ideal for manufacturing, agro-industrial and service activities, accepting challenges for a modern and globalized economy.

El Salvador is committed to attracting investment from natural or legal persons, national or foreign, that develop, within the national territory, new investment in innovation projects or technological manufacturing, in related productive sectors. Some of the commercial activities that will enjoy tax incentives are: Yo) Programming, management, maintenance, consulting and analysis of computer systems or software; i) Development and marketing of cloud computing and data flow services; artificial intelligence, massive data analysis; distributed ledger technology; cybersecurity solutions; quantum computing; iii) Technologies based on the manufacturing of parts, materials and equipment or facilities, assembly, including manufacturing plants for technological equipment or hardware, semiconductors, communications technology, robotics, nanotechnology, aircraft and unmanned vehicles, among others.

The beneficiaries of the law must have a current Qualification Agreement issued by the Ministry of Economy, and may opt for different tax incentives for a period of 15 years, among which are:  Yo) Total exemption from Income Tax regarding incentivized activities; i) Total exemption from municipal taxes on the net assets declared by the beneficiaries; iii) Total exemption from the payment of Import Tariff Duties and taxes levied on goods, inputs, machinery, equipment and tools necessary for the development of the incentivized activities, among others.

On June 2, the Regulation was issued, and it will come into effect 8 days after its publication in the Official Gazette. This regulation facilitates the application of this Law and develops its regulations, including the procedure for obtaining and maintaining the Qualification Agreement. before the Ministry of Economy and deadlines and procedures are established to enjoy its benefits.

With these regulations, El Salvador is preparing to be a strategic space for development and investment in innovation and technology.

If you want more information on how to invest in El Salvador, you can contact us through our social networks and at the following emails:

Investment

Gabriel Lara: glara@romeropineda.com

Innovation and Intellectual Property

Nadya León: nadya@romeropineda.com

Elsy Durán: elsy@romeropineda.com