Investment Incentive Laws in El Salvador
The regimes compared
| Law | Who it is for | Main benefit | Term |
|---|---|---|---|
| Free Zones Law | Free zone developers, users and inward processing warehouses (DPA) | Income tax, municipal tax and import duty exemptions | Set by the law; new extra 10-year terms after the 2025 reform |
| International Services Law | Service centres and service parks (BPO, IT, medical, aircraft services and more) | The same type of exemptions as free zones | Set by the law; new extra 10-year terms after the 2025 reform |
| Innovation and technology manufacturing law | New investments in software, AI, cloud, cybersecurity, hardware, semiconductors, drones and R&D | Full income tax, municipal net asset tax, capital gains and import duty exemption | 15 years |
| Tourism Law | Tourism projects of USD 25,000 or more | Income tax, property transfer tax and import duty exemption, 50% municipal tax relief | 10 years (municipal relief 5 years) |
| Renewable energy incentives | Renewable power plants; suppliers and installers of systems for end users | Import duty and income tax exemptions | 5 to 10 years |
| Investment expansion law | Companies operating for at least 5 years that invest USD 1 million or more | Income tax credit of 10% to 30% of the investment | Credit usable for up to 10 years |
| High-rise real estate incentives | New buildings of 35 storeys or more | Income tax exemption, extended to dividends | 15 years |
| Legal stability agreements | New or expanded investments in strategic sectors, at least 4,220 industry minimum monthly wages in fixed assets | Frozen tax, customs and migration rules | 5, 10 or 20 years |
| Digital assets rules | Registered issuers and service providers of digital assets, and acquirers | Exemption from all taxes on regulated digital asset income and gains | No end date in the law |
Source: PwC Worldwide Tax Summaries: El Salvador, tax credits and incentives; US Department of State: 2026 Investment Climate Statement, El Salvador; INVEST: Law for the Promotion of Innovation and the Manufacture of Technologies, English translation; LexLatin: El Salvador eases the investment expansion regime; INVEST: Legal Stability Law for Investments, English translation; BLP: Key reforms to the Free Trade Zones Law and new reinvestment incentives in El Salvador1,2,3,4,5,6
How the regimes work
- Qualification first: the benefits start from the qualification agreement or contract, not from the date the company is formed. Under the technology law, for example, the 15 years run from the day after the agreement is notified.
- Only the incentivised activity: exemptions cover the income of the qualified activity. Beneficiaries must keep separate accounts for it.
- New investment: most regimes require a new investment or an expansion. The technology law excludes investments made before it came into force and restructurings of existing operations.
- One regime at a time: companies in free zones or under the International Services Law cannot also use the technology law, and the high-rise rules prevail over other exemption laws.
- Obligations: beneficiaries file reports, allow inspections and can lose the benefits, with fines, if they use them for other activities.
Source: PwC Worldwide Tax Summaries: El Salvador, tax credits and incentives; INVEST: Law for the Promotion of Innovation and the Manufacture of Technologies, English translation1,3
Recent reforms
- December 2025 to early 2026: reforms to the Free Zones Law (Decree 493 of 23 December 2025) and to the International Services Law added a new 10-year income tax period for companies that expand, and changed the investment and employment thresholds.
- January 2026: the Investment Expansion Law created an income tax credit for large expansions by established companies.
- September 2026: a reform of the expansion law lowered the operating history required from 10 to 5 years and opened it to business groups.
- January 2025: a reform of the Bitcoin Law made accepting Bitcoin voluntary for private parties and stopped tax payments in Bitcoin; see digital assets rules.
Source: BLP: Key reforms to the Free Trade Zones Law and new reinvestment incentives in El Salvador; Consortium Legal: Reforms to the International Services Law and the Free Trade Zones Law in El Salvador; LexLatin: El Salvador eases the investment expansion regime; Reuters: Lawmakers in El Salvador rush new bitcoin reform after IMF deal (30 January 2025)6,7,4,8
Before you rely on an incentive
Incentive laws in El Salvador are reformed often and some, such as the Tourism Law, depend on application windows that are extended by separate decrees. Confirm the current text with the ministry in charge or with INVEST, and get written advice from a Salvadoran tax lawyer before you sign leases or order equipment on the strength of an exemption.
Frequently Asked Questions
What tax incentives does El Salvador offer investors?
El Salvador offers incentives through special laws, including the Free Zones Law, the International Services Law, the innovation and technology law, the Tourism Law, renewable energy laws, the 2026 Investment Expansion Law and legal stability contracts.
How does a company obtain an incentive?
The company applies and receives a qualification agreement (acuerdo de calificación) from the ministry in charge. Only the activities named in that agreement are exempt.
Can incentive regimes be combined?
Not always. Some of the laws bar a company from combining them, so check the conditions of each regime.
Each law in detail
Free Zones Law
Exemptions for free zone developers, users and DPAs, and the 2025 reinvestment reform.
1998 Year of the Free Zones Law, Law No. 405 of 3 September 1998
Read more
International Services Law
Free zone style exemptions for exported services, with the 2026 minimum investments.
2007 Year of the International Services Law, Law No. 431 of 11 October 2007
Read more
Innovation and technology manufacturing law
15 years of tax exemptions for new software, AI, hardware and R&D investments.
15 years Term of the exemptions, from the day after the qualification agreement is notified
Read more
Tourism Law
Income tax, import duty and transfer tax exemptions for tourism projects from USD 25,000.
USD 25,000 Minimum new investment for a Project of National Tourist Interest
Read more
Renewable energy incentives
Tax exemptions for renewable power plants and for suppliers of systems to end users.
10 years Import duty exemption on plant machinery and materials, for the first 10 years
Read more
Investment expansion law
A 10% to 30% income tax credit for established companies that expand.
10% to 30% Income tax credit, as a share of the qualified investment
Read more
High-rise real estate incentives
15 years without income tax for new buildings of 35 storeys or more.
35 Minimum number of storeys of a qualifying building
Read more
Legal stability agreements
A contract that freezes the tax and customs rules for 5 to 20 years.
4,220 Industry minimum monthly wages: the minimum investment in fixed assets
Read more
Digital assets rules
Tax exemptions for regulated digital assets, CNAD registration and the 2025 Bitcoin reform.
All taxes Exemption on income, returns and capital gains from regulated digital assets
Read more
Sources
- PwC Worldwide Tax Summaries: El Salvador, tax credits and incentives
- US Department of State: 2026 Investment Climate Statement, El Salvador
- INVEST: Law for the Promotion of Innovation and the Manufacture of Technologies, English translation (PDF)
- LexLatin: El Salvador eases the investment expansion regime (in Spanish)
- INVEST: Legal Stability Law for Investments, English translation (PDF)
- BLP: Key reforms to the Free Trade Zones Law and new reinvestment incentives in El Salvador
- Consortium Legal: Reforms to the International Services Law and the Free Trade Zones Law in El Salvador
- Reuters: Lawmakers in El Salvador rush new bitcoin reform after IMF deal (30 January 2025)
Figures checked 8 November 2026. Prepared by InvestSalvador.com for general information. It is not investment, tax or legal advice; please confirm details with a qualified adviser before acting.
