Uncertainty Surrounds Salvadoran Free Zones

By 2015, the country must eliminate those benefits granted to companies operating under the Free Zone regime.

Wednesday, February 17, 2010

The country committed to do so at the World Trade Organization, and could face lawsuits by other countries if it does not comply.

The privileges granted to these companies include paying neither income tax nor municipal obligations.

Mario Róger Hernández, Economy vice minister, said last week that the government will hold talks with businessmen to land an agreement before the 2015 deadline”.

More on this topic

WTO Extends Deadline to El Salvador

October 2010

The country has until late 2011 to submit a plan to eliminate privileges for companies at Free Trade Zones.

Deputy Economy Minister, Mario Roger Hernández, said the deadline for submission was to expire at the end of 2010.

"The WTO mandates that middle-income countries, such as El Salvador, must change the benefits they receive from free zones no later than at the end of 2015." Elsalvador.com published.

El Salvador: New Proposal To Replace Free Zone Regime

February 2010

The Textile, Apparel and Free Zone Chamber will propose a replacement for the current Free Zone regime.

Patricia Figueroa, director of the Chamber, didn't provide details on which benefits will be included in the proposal.

She explained they are analyzing countries like Costa Rica and Colombia, where similar regimes have worked out successfully.

El Salvador Faces Tough Test at WTO

February 2010

The World Trade Organization demands explanation as to why the country is maintaining a 6% subsidy for exporters and various fiscal benefits for free zones.

El Salvador should have terminated the 6% exports subsidy four years ago, according to the agreement it reached with the World Trade Organization.

Free Trade Zones in Costa Rica: 5% Tax

April 2009

With the reform to the Law on Free Zones, the country is adapting its legislation to WTO rules.

On Tuesday, the Executive Branch presented draft amendments of the Law on the Free Trade Zone Regimen (7210), which amends five items in the current law, to the Legislative Assembly.