Introduces incentives for the expansion of existing investments
14 Jan 2026
On 14 January 2026, the Legislative Assembly of El Salvador adopted the Law on the Promotion of Investment Expansion (Decree No. 498), establishing tax incentives to encourage the expansion of existing investments. The law applies to domestic and foreign investors with at least ten years of operations in the country, and targets the following strategic sectors: textiles and clothing, agro-industry, food and beverages, automotive parts, electronics, plastics, footwear, chemical and pharmaceutical products, construction materials, and paper products.
Investment expansion is defined to include the establishment of new production lines, infrastructure development, acquisition of machinery and equipment, research and development activities, and expansion of production capacity.
Qualifying investors may receive a corporate income tax credit ranging from 10 per cent to 30 per cent of the investment value, usable for up to ten years, as well as an exemption from real estate transfer tax on property acquired for expansion projects. Access to these incentives is subject to prior qualification by the Ministry of Economy and compliance with applicable tax and administrative requirements.
Nature of measure:
Type:
-
Promotion and facilitation (Investment incentives)
Industry:
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Manufacturing (Manufacture of food products, beverages and tobacco products, Manufacture of textiles, wearing apparel, leather and related products, Manufacture of wood and paper products, Manufacture of coke and refined petroleum products, Manufacture of chemicals and chemical products, Manufacture of basic pharmaceutical products and pharmaceutical preparations, Manufacture of rubber and plastics products, and other non-metallic mineral products, Manufacture of computer, electronic and optical products, and electrical equipment, Manufacture of transport equipment)
Inward FDI:
Yes
Outward FDI:
No
Sources:
