
The Legislative Assembly approved, with 57 votes, a reform to the Law for the Promotion of Investment Expansion, modifying the conditions under which companies already operating in El Salvador can access tax incentives for expanding their investments. One of the key changes establishes that business groups must invest a combined total of at least US$75 million to qualify for the highest tier of tax credit, which is 30%.
The reform introduces the concept of business groups that operate in a coordinated manner within the country and belong to the same production chain. Under this mechanism, multiple companies can aggregate their investments to meet the required amount, provided that each company within the group makes an individual investment of at least US$1 million.
The US$75 million requirement applies specifically to reaching the maximum incentive tier. Currently, the law establishes tax credits of 10% for investments between US$1 million and US$10 million; 20% for investments exceeding US$10 million up to US$20 million; and 30% for investments of US$20 million or more. With the reform, business groups seeking the 30% credit must collectively reach the new US$75 million threshold.
The measure aims to incentivize larger-scale expansion projects and encourage companies already operating in the country to continue increasing their production capacity. The reform targets investments designed to strengthen sectors considered strategic to the economy, including textiles and apparel, agribusiness, food and beverages, auto parts, electronics, plastic products, footwear, chemical-pharmaceutical products, construction, and paper manufacturing.
Dania González, a legislator from the Nuevas Ideas party, explained that the inclusion of business groups expands the pool of potential beneficiaries, particularly when multiple companies participate in the same production chain. Consequently, investments made by related companies can be considered jointly to meet the parameters established in the legislation.
In addition to changing the thresholds for business groups, the reform reduces the minimum tenure required for investments or operations in El Salvador—from ten years to five—to qualify for these benefits. This would allow companies with a more recent presence in the country to access the incentives when undertaking expansion projects.
The legislation also modifies the methodology for calculating the tax credit. Instead of basing the calculation on results from the last ten years, it will use the inflation-adjusted average for the last four years. Furthermore, exclusion rules are being implemented to allow companies whose previous incentives have expired, or those that received one-time rather than permanent benefits, to qualify for the incentives established by these regulations.
According to data cited during the reform debate, since the law took effect in january 2026, US$502 million in expansion investments and over 2,200 new specialized direct jobs have been recorded. With the approved changes, the Assembly aims to broaden the scope of the incentives and encourage new expansion investments within the country.
The reform will enter into force eight days after its publication in the Official Gazette. Additionally, companies that have already obtained certification for their investor profile and expansion project prior to the law taking effect will be able to apply the new tax credit calculation methodology for the 2026 fiscal year.
You may also read:
