A. M. With the goal of attracting multi-million dollar capital, the representatives of the Finance Commission ruled in favor of creating a Special Regime to Incentivize and Facilitate High-Value Investments in El Salvador, which would establish tax advantages for projects of US$2 billion or more. This initiative seeks to boost the economy through increased productivity, employment, and exports.
The proposal establishes that any natural or legal person, national or foreign, that contributes resources of this amount to initiate commercial operations, acquire property, machinery, or lend capital for productive purposes will be eligible for these incentives. These incentives will also apply to companies that relocate their headquarters from abroad to the country.
One of the main attractions of the regime is the exemption from Income Tax (ISR) on profits derived from new investments, as well as the elimination of income tax withholdings—except for monthly salaries of up to US$100,000. Additionally, they will be exempt from paying municipal taxes, property purchase taxes, and the import of machinery and materials.
Finance minister Jerson Posada clarified that there are no local companies with assets worth US$2 billion, so the benefit does not represent a fiscal sacrifice for the country. “All we will bring is profit: more employment, more capital, and a more dynamic Gross Domestic Product”, he said.
To register their investment, interested parties must submit a formal application to the Ministry of Economy, along with legal documents and a financial report prepared by a salvadoran public accountant. They must also demonstrate that the capital has already been transferred to the country.
To officially access the benefits, investors must register with the Ministry of Finance and notify the Dirección General de Impuestos Internos (DGII) within 30 days of the start of operations. The DGII will have 10 business days to issue its resolution.
