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El Salvador Exempts Taxes For The Technology Field

el salvador exempts taxes for the technology field 2

To ensure development in El Salvador, Nayib Bukele wants to remove taxes from technology initiatives. As he promised a few days ago, El Salvador‘s President, Nayib Bukele, has introduced legislation to exclude technology businesses from paying taxes. What are the implications of this?

While El Salvador‘s President, Nayib Bukele, indicated on March 24 that he would introduce a measure pertaining to a tax reduction in the technology sector to encourage innovation, the bill was tabled this week in the ‘Asamblea Legislativa.

The Measure also Affects Blockchain Enterprises

This measure also affects blockchain enterprises since natural or legal persons working in distributed ledger technology are named among the qualified sectors described in article 6. More generally, this includes fields such as artificial intelligence, programming, data analysis, and many technical businesses such as robots and semiconductors, to mention a few.

El Salvador‘s Minister of Economy, Mara Luisa Hayem, submitted this measure to the country’s legislators: “We are submitting a proposal to President Nayib Bukele‘s request that would stimulate innovation in the country’s technological industry. Under the Act for the Promotion of Technical Innovation and Manufacturing, we hope to create more skilled job opportunities.”

el salvador exempts taxes for the technology field

The Tax Exemptions will Continue for 15 Years

Among the tax exemptions suggested by this measure are income taxes, municipal taxes, capital gains taxes, and import taxes. The declared goal is to establish El Salvador as a technology powerhouse in order to gain international recognition and boost job development.

These tax exemptions will be effective for a period of 15 years from the day when the Ministry of Economics certified the company’s eligibility. Only the areas of operation stated in article 6 are eligible for these requirements; hence, if a corporation has many sectors of activity, these rules will only apply to the ones that are relevant.

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