On August 11, 2025, the Official Gazzette published two decrees establishing special regimes designed to position El Salvador as an attractive destination for foreign direct investment. Both instruments aim to facilitate the inflow of capital, technology, and specialized personnel into the country.
- Special regime for high-value investments
This regime applies to investments equal to or greater than US $2 billion in capital or assets, made through capital contributions for the incorporation of companies, purchase of real estate, among others. Investor benefits include:
- Full exemption from Income Tax on profits, dividends, royalties, and capital gains derived from the investment.
- Exemption from withholding tax on income at source.
- Exemption from the Real Estate Transfer Tax on the purchase of property for business activities.
- Exemption from municipal taxes on declared net assets.
- Exemption from tariffs and import duties on goods, supplies, machinery, and equipment necessary for operations.
Requirements
To access these incentives, investors must:
- Register the investment with the Ministry of Economy, submitting documentation that proves the entity’s legality and the amount of the investment.
- Enroll in the Taxpayers’ Registry of the Tax Administration.
- File a written notice with the General Directorate of Internal Taxes (DGII) within 30 days of starting operations, providing details of the investment, partners, and the amount of capital or assets transferred.
- Report any changes to partners, corporate structure, or registry data within 10 business days of the modification.
- Special regime for technical personnel of new investments
This regime facilitates the incorporation of technical and administrative personnel for investors that relocate their headquarters or establish permanent operations in El Salvador. Its main benefits include:
- Application of a fixed income tax withholding as a final payment for monthly salaries of up to US $100,000.
- Flexibility to hire technical personnel, whether resident or non-resident, including through outsourcing arrangements.
- Clear procedures to register personnel with the Tax Administration and access the benefits.
Requirements
To access these incentives, investors must:
- Submit to the Tax Administration the payroll of hired personnel (domestic or foreign), including identification, specialization, and role.
- Report any hiring or termination of personnel within 5 business days.
- Obtain prior qualification from the General Directorate of Internal Taxes of the Ministry of Finance when the investor is a non-resident, which requires:
- An electronic application with the required information.
- Payroll of hired personnel.
- Registration in the Taxpayers’ Registry.
Key considerations for investors
- Benefits apply exclusively to new investments that begin operations after the decrees enter into force.
- The Tax Administration retains oversight and enforcement powers and may revoke benefits in cases of non-compliance or abuse of the regime.
- The Ministry of Finance and the Ministry of Economy are authorized to issue resolutions and administrative guidelines to clarify the scope of these provisions.
