A. M. 
The Technology, Tourism, and Investment Commission of the Legislative Assembly issued a favorable opinion on the creation of the Law to Promote Investment Expansion, legislation that seeks to establish special regulations and tax incentives for companies with established operations in the country to expand their productive activities and continue investing in El Salvador.
The proposal is aimed at individuals or legal entities, both national and foreign, that can demonstrate at least 10 years of continuous operation in the country and that decide to make new investments in strategic sectors such as textiles and apparel, agribusiness, food and beverages, auto parts, electronics, plastics, footwear, pharmaceuticals, construction products, paper and related products.
During the project’s review, the committee met with Rodrigo Ayala, president of Agencia de Promoción de Inversiones y Exportaciones de El Salvador (INVEST), who explained that the initiative arose in response to a recurring demand from the productive sector.
According to Ayala, many companies have stated that, while there are incentive laws to attract new investments, there was no specific framework to benefit established companies seeking to expand. “In our daily work with investors, they told us that there are incentives for new industries, but not for those who want to grow within the country,” the official noted.
Tiered tax incentives
The main attraction of the law is a table of income tax deductions, applicable exclusively to new investments made as part of expansion processes. Tax benefits would range from 10% to 30%, depending on the investment amount.
The first bracket covers investments from US$1 million to US$10 million, which would qualify for a 10% tax credit. The second bracket corresponds to investments between US$10 million and US$20 million, with a 20% credit. Finally, investments exceeding US$20 million could qualify for a 30% tax credit.
In addition, the legislation proposes an exemption from the Real Estate Transfer Tax for the acquisition of properties intended for the expansion of operations, provided that these assets remain in use for a minimum period of five years.
Business interest and key conditions
Ayala reported that at least 144 companies have already expressed interest in taking advantage of this law, motivated by the conditions offered by the country. He also estimated that up to 3,000 medium and large companies could benefit from the regulations, provided they meet the established criteria.
Among the factors most valued by investors is security, which, according to the head of INVEST, has become a determining factor in attracting and retaining capital. “One of the things they mention most is security; that’s why those who are thinking about doing business consider the country a place to establish themselves and grow”, he said.
Regional competitiveness and political support
Representative William Soriano emphasized the importance of maintaining a constant dialogue with the business sector, noting that other countries in the region actively compete to attract investment through more aggressive incentives.
“The challenge is to modernize our laws to have a greater capacity to compete and attract investment, which is precisely what we are seeking”, stated the legislator, who also highlighted the country’s advantages, including government support and a secure environment that, he said, is not easily found in other markets.
What is considered expansion?
The law defines expansion activities as the opening of new production lines, the construction or acquisition of industrial and logistics infrastructure, the purchase of machinery and technology, the creation of research and development centers, and the expansion of production capacity. The text clarifies that these projects cannot involve the simple replacement of existing assets or the reduction of current operations.
Requirements, control, and oversight
Interested companies must comply with requirements such as submitting an investor profile, being up-to-date with their tax and customs obligations, and obtaining an Investment Qualification Agreement for expansion issued by the Ministry of Economy.
Compliance with the law will be overseen by the Ministry of Economy, through its Investment Directorate, and by the Ministry of Finance, through its Internal Revenue Service. Both institutions will conduct inspections and audits to ensure the proper use of tax benefits and compliance with technical, environmental, tax, and labor regulations.
With the favorable opinion issued by the committee, the initiative advances in the legislative process and is emerging as a key tool to stimulate reinvestment, strengthen competitiveness, and boost the salvadoran economy.
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