Technology companies in El Salvador have voiced their support for President Nayib Bukele’s proposal to eliminate taxes on technological innovations and hardware manufacturing. The Salvadoran Fintech Association believes that this initiative will attract more investment from technology companies.
According to Erick Chacón, the president of the Salvadoran Fintech Association (Asafintech), this news is exciting for the sector, and new fiscal incentives will allow for the expansion of the technology ecosystem. He also noted that this is an important step in positioning the country as a hub for technology and innovation.
“We’ve seen quick reactions from people who live outside El Salvador making positive comments about setting up companies here instead of Costa Rica. This suggests that we will have a new wave of foreign companies coming to set up their operations in El Salvador, employing Salvadorans,” he said.
Mayer Mizrachi, a Jamaican-Panamanian entrepreneur who founded Geeky Drop, a marketplace in Panama to buy or sell gaming and technology items quickly and safely, wrote on social media that if the law is approved, he will change his expansion plans from Costa Rica to El Salvador.
“Given that El Salvador is dollarized, this incentive will likely put it at the forefront of technology in Latin America […] If this bill is passed, I will expand Geeky Drop to El Salvador and cancel plans to go to Costa Rica,” he said.
Chacón also mentioned that the proposed law would have an impact on the importation of hardware for production in the territory. According to data from the Central Reserve Bank (BCR), in February 2023, El Salvador imported $102.3 million in information and communication technology (ICT) goods, with a year-on-year growth of 4.29%, which represents $4.5 million more than the same period in 2022.
Of that total, $57.39 million were computers and peripheral equipment; $18.76 million in communication equipment; $18.41 million in electronic and consumer equipment; $3.72 million in electronic components, and $4.04 million in the “miscellaneous” classification made by the BCR.
The Bitcoin community reacted with high expectations to the announcement by the Salvadoran president. Investors in the sector, such as Max Keiser and Simon Dixon, emphasized that the initiative would contribute to the growth of the digital asset ecosystem in the country. Currently, 78 companies have registered with the central bank as Bitcoin service providers.
“Nobody can keep up with President Bukele’s pace. No media outlet has captured the extent of the remarkable change in El Salvador,” Keiser said.
“This is an example of how to grow a country based on the Austrian economy and Bitcoin,” Dixon added.
Even Jason Williams, founder of Morgan Creek Digital, a firm that provides investment services in crypto assets in the United States, stated that he considers establishing a new project in the territory due to tax exemption.
“I guess I’ll move to El Salvador to start my next company. This is incredible and progressive,” he said on Twitter.