In a significant move to boost urban development, the Legislative Assembly of El Salvador has approved a new law aimed at encouraging the construction of high-rise buildings of 35 stories or more. The decree, titled “Special provisions for the promotion and granting of tax incentives to encourage the development of high-rise real estate projects,” received strong support, passing with 57 votes.
The law provides a 15-year income tax exemption on profits for owners involved in the construction of new high-rise developments. This incentive is available to individuals, legal entities, and associations, regardless of their residence status, engaging in various real estate activities, including sales, rentals for tourism or commercial purposes, and construction services.
To access these tax benefits, investors must apply to the General Directorate of Internal Taxes within the Ministry of Finance before beginning any construction work. Luis Rodríguez, Executive Director of the Metropolitan Area Planning Office of San Salvador (OPAMSS), noted that this initiative could attract an estimated $7.8 billion in investments across various projects in the San Salvador Metropolitan Area and surrounding regions.
Currently, real estate development in El Salvador is concentrated in more established areas, which offer more horizontal building space. This new law aims to facilitate high-rise construction in municipalities such as San Martín, Soyapango, and Apopa, promoting more diverse urban growth.
Congressman Edgardo Mulato emphasized the collaboration between the government and private sector, stating, “We want to encourage construction to address housing solutions for the population, and these exemptions will motivate builders.”
The construction industry is a vital sector in El Salvador, generating over 200,000 direct jobs and accounting for 12.5% of the country’s Gross Domestic Product, according to data from the Central Reserve Bank (BCR). With this new law, El Salvador aims to revitalize its urban landscape while fostering economic growth and job creation.
