Proposals for Special Economic Zones Law

In El Salvador, it is proposed that the law discussed in the Assembly, considers the reduction of minimum requirements for investments made in special economic zones, to compensate for the disadvantages of lack of productive activity in the area.

Monday, July 8, 2019

In July 2018, the Executive Branch presented to the Legislative Assembly the draft Law on Special Economic Zones (LZEE), which is being analyzed by the Economy Commission.

The proposal consists of creating special economic zones in 26 municipalities in the southeast of the country, where tax incentives would be provided for activities related to clean energy and the exploration of natural gas and oil.

The Salvadoran Foundation for Economic and Social Development (Fusades) made an analysis of the proposal and also makes recommendations so that the application of the law achieves the expected results.

One of the conclusions of the analysis is that "... the proposal that fiscal incentives be limited in terms of time (finite time), in addition to reducing the minimum investment requirements, so that they are more attractive than in other laws, and that they compensate for the disadvantages of the lack of productive activity in the area, should be submitted for discussion by the various actors."

The document adds that "... The main conclusion of the report is that, in order to guarantee the development of the eastern zone, or any other region, it is not enough to have a special zone law, but it is necessary that the law be accompanied by other public policy measures that constitute a comprehensive local development agenda, so that the inhabitants of the zone achieve a continuous improvement in their welfare. At the same time, the local development agenda must be framed within a long-term development strategy for the country as a whole.

See " Analysis of the Law on Special Economic Zones in the South Eastern Region of El Salvador" (in Spanish).

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