Image by President Nayib Bukele announced that he had signed into law the “Innovation and technology manufacturing incentive act” aimed at fostering the growth and sustainable development of the technology sector. The law initiative was approved by the Salvadoran Congress in mid-April.
I’ve just signed into law the INNOVATION AND TECHNOLOGY MANUFACTURING INCENTIVES ACT, which eliminates all taxes (income, property, capital gains, and import tariffs) on technology innovations, software and app programming, AI, computer, and communications hardware manufacturing. President Nayib Bukele.
The Innovation and technology manufacturing incentive act grants a 15-year tax exemption to the technology industry; it exempts the sector from taxes on income, property, capital gains, and import duties.
This law aims to encourage El Salvador programming and software development, artificial intelligence, massive data analysis, cybersecurity solutions, and manufacturing-based technologies in manufacturing for hardware equipment, among others.
The Law for the Promotion of Technological Innovation and Manufacturing was endorsed by the ruling political party (New Ideas) and its allies.
The legislation will take effect upon its publication in the Official Newspaper, which is the next step after approved and signed by the Salvadoran President.
The law specifically exempts the technology sector from income tax and all related withholdings. It also ensures a complete exemption from municipal taxes and exempts them from paying capital gains tax.
Furthermore, it includes a waiver on customs duties for the importation of goods, raw materials, machinery, equipment, and tools necessary for technological activities.
Lastly, the law facilitates the signing of bilateral agreements with technologically advanced nations in the areas of innovation and manufacturing.
With the approved law for the Promotion of Technological Innovation and Manufacturing, El Salvador could become an attractive destination for technological investments.
With this law, El Salvador opens the doors to the technological manufacturing sector; so that it can establish its operations in the country. We will benefit the entire economic pyramid, whether it is a small company, a person who is starting a business, or a large company. Nuevas Ideas deputy, Rodrigo Ayala.
In summary, these activities encompass programming and software development, artificial intelligence, data analysis, cybersecurity solutions, and manufacturing-based technologies in hardware equipment, among others.
