Free zones
Free Zones in El Salvador
El Salvador has 17 free zones with 291 companies and about 70,000 employees, according to the US State Department. A free zone user pays no income or municipal taxes for 15 years in the San Salvador metropolitan area, or 20 years outside it, and imports machinery and inputs free of duties and IVA.
- Free zones, according to the US State Department
- 171
- Free zones, according to the US State Department
- Years of full income tax exemption, inside or outside the metropolitan area
- 15 / 202
- Years of full income tax exemption, inside or outside the metropolitan area
- Initial investment for a producer, or 50 permanent jobs
- $500,0002
- Initial investment for a producer, or 50 permanent jobs
- IVA on imports of machinery and inputs for the activity
- 0%2
- IVA on imports of machinery and inputs for the activity
Three regimes
- Free zone user: inside a fenced zone run by an administrator, under the Free Zones Law.
- Inward processing warehouse (DPA): in its own approved premises outside a zone.
- Service park or service centre: for exported services, under the International Services Law.
Source: General Directorate of Customs: Free Zones Law, consolidated with Decree 493 of 23 December 2025; General Directorate of Customs: International Services Law, consolidated with Decree 497 of 14 January 2026 (PDF, in Spanish)2,3
Tax exemptions for users
| Tax | Metropolitan area | Outside it |
|---|---|---|
| Income tax | 15 years full, then 60% for 10 and 40% for 10 | 20 years full, then 60% for 15 and 40% for 10 |
| Municipal taxes | 15 years full, then 90% for 10, then 75% | 20 years full, then 90% for 15, then 75% |
| Import duties and IVA | Exempt for as long as the company operates | Exempt for as long as the company operates |
Source: General Directorate of Customs: Free Zones Law, consolidated with Decree 493 of 23 December 20252
The December 2025 reform added a repeatable 10-year extension for users that increase their investment by 100%, and Deloitte notes that the metropolitan area now covers 23 districts instead of 14.2,4
Entry thresholds
| Applicant | At least one of |
|---|---|
| Producer in a free zone | $500,000 in fixed assets within 2 years, or 50 permanent jobs |
| Trader in a free zone | 5 permanent jobs |
| DPA producer | $800,000 in fixed assets within 2 years, or 75 permanent jobs |
Source: General Directorate of Customs: Free Zones Law, consolidated with Decree 493 of 23 December 20252
The Ministry of Economy must decide within 25 working days for a user and 35 for a DPA.2
Sources
- US Department of State: 2026 Investment Climate Statement, El Salvador
- General Directorate of Customs: Free Zones Law, consolidated with Decree 493 of 23 December 2025 (in Spanish)
- General Directorate of Customs: International Services Law, consolidated with Decree 497 of 14 January 2026 (PDF, in Spanish)
- Deloitte: reforms to the Free Zones Law of El Salvador, January 2026 (in Spanish)
Figures checked 9 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.