With the modification of the Free Zones Law, it will now be possible to accumulate up to 25 samples which do not have a commercial value in a single declaration.
Jaime Campos, executive director of the Regulatory Improvement Organization, told Elmundo.sv that the reform "...'will help the investment climate in the country' because the reform introduces the concept of the 'accumulated goods declaration', which will allow imports or exports of up to 25 samples in a single declaration."
From 12 to 14 November representatives from free zones in Latin America will be gathering together in Panama City to discuss issues such as changes in legislation and the role of free zones in the logistics chain.
Textile businessmen say the new free zones law has caught the interest of investors and will strengthen the productive chain.
Elsalvador.com reported that "despite a series of reforms promoted under the table by the Finance Minister Carlos Cáceres, which put companies operating under the Free Zone scheme on alert, the approval of the regulations as they had been agreed between the public and private sector a year ago, "is a tremendous tool (...), a tremendous engine which will make this sector take off," said the president of the Chamber of the Textile, Clothing Companies and Free Zones in El Salvador (Camtex), Jose Antonio Escobar ".
The Chamber of Textile, Clothing Companies and Free Zones states that if the new law on Free Zone included the tax, it would drive away millions of dollars in investments.
Elmundo.com.sv reports that "The Chamber of Textile, Clothing Companies and Free Zones of El Salvador (Camtex) on Wednesday opposed changes made by the Finance Minister Carlos Cáceres to the proposed amendments to the Law on Free Zones, agreed with the sector since October 2011."
Industrialists are urging early approval in order to eliminate investor uncertainty about the new regime that will prevail in the country.
The reform of the law on free zones in El Salvador must be current in 2016, as the World Trade Organization (WTO) has set a deadline for the country of December 31, 2015 to change its regime internationally eliminating incentives which are considered unfair competition.
Organizations and unions of Salvadoran maquila workers have proposed the creation of an insurance policy guaranteeing payment of 100% of salaries in the event of closure of business operations.
The bill envisaged by organizations and unions also proposes sanctions such as loss of tax benefits for a period of three months for those companies who commit very serious offenses.
Amendments to the Law on Free Zones will define the rules of the game that employers in El Salvador need to know in order to increase their investments in the textile sector.
The newly formed cluster of synthetic fabric textile companies in El Salvador has temporarily stopped their investment plans in order to see what reforms will be made to the Law on Free Zones. In other words, they want "clear rules".
The government of El Salvador is discussing with the private sector a bill to create specific zones for agricultural activities.
Once the Assembly approves the amendments to the free zones law, which will modify the industrial free zone scheme, negotiations will begin for the creation of a specific regime for the agricultural industry.
New investments in the sector are pending the approval of El Salvador's new tax-free zone law.
According to the Salvadoran chamber of textile manufacturers (CAMTEX in Spanish), the reforms being considered by the government comply with all the demands made by the World Trade Organization (WTO).
If a reform of the law is approved, tax exemptions enjoyed by members of the scheme would be limited.
Although the purpose of the law reform is to modernize the free zones scheme and meet the requirements established by the World Trade Organization, companies currently operating under the scheme would be affected.
There is a growing demand for textiles and clothes manufacturing, but a new Law on Free Zones is needed in order to bring fresh investments to this sector.
The World Trade Organization (WTO) has determined, after two extensions, the country should, in 2015, replace the law that has been in force since 1998, which grants tax benefits such as a total and permanent exemption from taxes, among others.
A change in the incentives for foreign investment is needed in order to remain competitive in respect to other countries in the region.
The modernization of the law on free zones, which countries like Costa Rica reshaped in 2005, for the purpose of improving incentives to attract foreign companies is still in process in El Salvador.
Government and private company representatives have achieved an 80% consensus on the new draft law on Free Zones.
So says the executive director of the Chamber of the Textiles, Clothing and Free Zones (CAMTEX), Patricia Figueroa, without providing specific details on the proposals.
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