The Finance Committee of El Salvador’s Legislative Assembly has voted in favor of Opinion No. 114, which supports a new legal decree titled the “Special Regime to Incentivize and Facilitate High-Value Investments in El Salvador.” The proposal aims to attract foreign direct investment by offering a range of tax exemptions to individuals and entities transferring investments valued at $2 billion or more into the country.
The approved opinion paves the way for the Legislative Assembly to vote on the full decree, which would benefit both foreign investors and Salvadorans living abroad who relocate qualifying high-value investments to El Salvador. These investments may be in any economic sector, provided they meet the monetary threshold through direct investment or asset valuation.
“What we seek is to make the country more attractive for these new investments by granting certain tax benefits. This only applies to new investments; it does not apply to existing ones,”
— stated Jerson Posada, Minister of Finance.
Key Tax Incentives for Qualified Investors:
- Full Income Tax (ISR) Exemption
Profits, dividends, royalties, rents, capital gains, and other economic benefits are exempt from ISR for qualifying investments. No payment or advance declaration is required. - Real Estate Transfer Tax Exemption
Applicable to property acquired for the development of economic activities. - Municipal Tax Exemption
Full exemption on municipal taxes related to net declared assets. - Import Duty (DAI) Exemption
Applies to goods, supplies, machinery, equipment, and tools used in the business activities of eligible investors.
The Minister of Finance clarified that no existing Salvadoran company currently holds capital or assets of this magnitude, emphasizing the initiative is designed specifically to attract new large-scale capital inflows. “There is no national company that even reaches half of that amount,” he noted.
Application Requirements:
- Certified legal incorporation documents (apostilled or legalized).
- Certified financial statements or initial balance sheet by a public accountant.
- Proof of investment or asset transfer to El Salvador.
- Registration in the Salvadoran Taxpayer Registry.
- A formal application submitted within 30 calendar days of starting operations to the General Directorate of Internal Revenue.
Global Investment Context:
Deputy Edgardo Mulato of Nuevas Ideas cited precedents in other countries, noting that major corporations have made multi-billion-dollar investments in nations like India, the U.S., Canada, Brazil, and Saudi Arabia. Examples included Amazon’s $4.4 billion investment in India and Apple’s $430 billion program in the U.S.
This legislative move positions El Salvador as a competitive global destination for high-value investments, particularly in sectors such as technology, energy, manufacturing, and logistics, while aligning the country with international trends in capital attraction.
