El Salvador’s president, Nayib Bukele, announced on Thursday the enactment of the Law for the Promotion of Innovation and Technology Manufacturing, which grants tax benefits to companies dedicated to the creation of technology.
The initiative exempts income, property, capital gains, and import duties taxes from software and hardware creation for a period of 15 years.
“I have just enacted the Law for the Promotion of Innovation and Technology Manufacturing, which eliminates all taxes (income, property, capital gains, and import duties) on technological innovations, software and application programming, AI, computer and communication hardware manufacturing,” he wrote on Twitter.
Shortly after the announcement, entrepreneurs and representatives of various institutions, including multilaterals, celebrated the enactment of the regulation and highlighted it as a great advance to position the country as a hub of innovation.
“We welcome this bet on the future of El Salvador, and we are ready as BCIE to accompany this whole process,” said Luis Rodriguez, the country director of the Central American Bank for Economic Integration (BCIE).
Likewise, the Minister of Economy, Maria Luisa Hayem, wrote: “Thank you, President Nayib Bukele. El Salvador is ready to attract new investments in the technology sector, generating more jobs for our population.”
Weeks ago, when the legislative project was still being discussed in the Legislative Assembly, Erick Chacon, president of the Salvadoran Fintech Association (Asafintech), told “Diario El Salvador” that the initiative “enthusiastically” excites the sector, as new tax incentives will allow for expanding the ecosystem. Additionally, he mentioned that these are important steps to position the country as a hub of technology and innovation.