Free Zones Law Reform in El Salvador

Companies starting operations in free zones outside the metropolitan area will be fully exempt from income tax for 15 years.

Friday, February 22, 2013

From a press release issued by the Legislative Assembly of El Salvador:

With 82 votes from all of the parliamentary groups, the Legislature approved tonight reforms to the Law on Industrial Free Zones, which according to the ruling, will generate greater certainty and legal security for the productive sector.

The reforms consist of a set of items that were agreed with the various sectors, including representatives from industry, labor and the Chamber of Textile Companies (CAMTEX).

Article 11 of the ruling introduces total exemption from income tax for a period of fifteen years for companies starting up operations outside of the metropolitan area.

Congresswoman Lorena Pena congratulated the Special Committee on Budget and Finance over which she presides for the unanimous approval of the reforms, and also welcomed the participation in them of labor representation, and from unions, businesses and CAMTEX, which allowed them to address the WTO challenges, and improve respect for labor rights, such as tax incentives for the business sector.

"We are pleased that after lengthy negotiations among stakeholders, the Government of El Salvador and the Legislative Assembly, has reached a consensus to pass this law," said Rep. Edwin Zamora, specifying that this will bring open up an opportunity for the country, to meet WTO commitments, as well as adding stability for investors who have generated hundreds of thousands of jobs in the country.

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