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El Salvador has registered US$502 million in investment expansion and more than 2,200 new direct and specialized jobs since the Law for the Promotion of Investment Expansion came into effect, reported Rodrigo Ayala, president of INVEST. These results are part of the impact that authorities seek to amplify with a reform to this legislation, aimed at facilitating increased investment by more companies already operating in the country and generating new job opportunities.
The Technology, Tourism, and Investment Commission of the Legislative Assembly issued a favorable opinion to amend the law, which has been in effect since january 2026. The proposal seeks to broaden the scope of tax incentives and facilitate the expansion of companies in sectors considered strategic for the national economy.
One of the main changes involves reducing the minimum age required for investments or operations in El Salvador to access the benefits from 10 to five years. With this modification, companies with less time operating in the country could qualify for incentives if they meet the other established requirements.
The reform stipulates that new investments must be aimed at strengthening productive activities in strategic sectors, including textiles and apparel, agribusiness, food and beverages, auto parts, electronics, plastic products, footwear, chemical and pharmaceutical products, construction materials, and paper and paper products.
Furthermore, it proposes that business groups be considered a single economic unit to access the benefits, provided their companies work in a coordinated manner. To obtain the maximum tax credit of 30%, they must make a joint investment of at least US$75 million, while each participating company must contribute at least US$1 million.
Currently, the law provides for tax credits of 10% for investments between US$1 million and US$10 million; 20% for amounts greater than US$10 million and up to US$20 million; and 30% for investments of US$20 million and above. The reform would also change the methodology for calculating this credit, using the average for the last four years, adjusted for inflation, instead of the results of the last 10 years.
The exclusion rules would also be relaxed, allowing companies whose incentives have already expired or that have received one-time, non-permanent benefits to access the benefits of the regulations again, provided they meet the requirements. The minister of Economy, María Luisa Hayem, said that the reform seeks to generate a catalytic effect on investment and job growth.
Finally, the proposal would allow those who have already obtained the qualification of their investor profile and their expansion project before the reform takes effect to apply the new methodology for calculating the tax credit corresponding to the 2026 fiscal year. With these changes, the authorities seek to strengthen incentives so that investments already in El Salvador continue to expand and contribute to the creation of more jobs.
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