El Salvador’s Legislative Assembly has approved a new legal framework aimed at attracting high-value foreign investments of $2 billion or more, with the goal of boosting productivity, generating jobs, and expanding exports.
The legislation, backed by 56 votes from Nuevas Ideas, PCN, and PDC, offers a series of tax incentives to large-scale investors. Benefits include exemption from Income Tax (ISR) on profits, dividends, royalties, rents, capital gains, and other economic benefits derived from qualifying projects. Additionally, investors will be exempt from real estate transfer taxes, municipal asset taxes, import duties, and taxes on machinery or equipment for commercial use.
Representative William Soriano (Nuevas Ideas) explained that the law seeks to position El Salvador as a hub for high-impact investment. “If we want to transform the country’s GDP, we must focus on attracting investments that can truly transform our economy,” Soriano said.
The incentives will apply to new projects led by individuals or companies—domestic or foreign—whose investments meet the $2 billion threshold. Transactions involving such projects will also be exempt from income tax withholdings and advance payments.
The initiative, presented by the Executive Branch, was opposed by Vamos and received no votes from ARENA legislators. Vamos representative Claudia Ortiz argued the law favors unequal growth, stating: “This regime is designed to attract rapid capital, but without guarantees. Jobs are not created by decree.”
Officials assert the measure will enhance El Salvador’s competitiveness, stimulate economic activity, and attract global investors seeking favorable conditions in Central America’s growing markets.