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Investment & Legal Framework
Monetary Integration Law
The Monetary Integration Law, effective as of
January 1, 2001, established a fixed exchange rate
of 8.75 Salvadoran Colones to 1.00 US dollar and
allows the use of the dollar as the official currency
of El Salvador.
Benefits:
• Elimination of exchange controls
• Elimination of the devaluation risk
Investment Law
The Investment Law effective 1999 clearly
establishes the specific guarantees for investors.
Its general objective is the promotion of investment
in the country, especially foreign investment, with
the purpose of contributing to the social economic
development of the country.
Benefits:
• Equality for all investors; foreign investors and
mercantile companies in which they participate will
have the same rights and obligations as national
investors and companies, with the exemption of those
established by law, without permitting unjustified
or discriminatory applications that may obstruct
their establishment, administration, use, usufruct,
extension, sale or liquidation of their investments.
• Freedom to carry out investments; any person or
corporation, national or foreign, can carry out any type
of investment in El Salvador except those limited by
law with no discrimination or differences by reason of
nationality, residence, race, sex or religion.
• Transfer of funds abroad: foreign investors are
guaranteed transferring abroad funds related to their
investments, which must be done with no delays
through prior convertibility to foreign currency by the
banking market.
• Access to local financing: foreign investors can
have access to the internal financing available at
the financial institutions in accordance to the terms
established by them.
• Protection and property safety: according to what is
established in the Constitution of the Republic, both
national and foreign investor are guaranteed property
protection and the right to the free disposition of
assets is recognized and guaranteed.
• Oficina National de Inversiones (NATIONAL
INVESTMENT OFFICE) (ONI). The Ministerio de
Economia (Ministry of Economy) created an office
in charge of facilitating, centralizing and coordinating
government procedures that national and foreign
investors must follow in order to establish and
develop their operations in the country.
Industrial and Commercialization Free Zone Law
The Industrial and Commercialization Free Zone
Law regulates the functioning of the Free Zones
and warehouses as well as the benefits and
responsibilities of the owners of the enterprises that
are developing, administrating and using them.
This law establishes a series of fiscal incentives
and benefits for a person or corporation, whether
national or foreigner, who establishes themselves
and operates in the Free Zones and Warehouses
operating there.
National and foreign companies can establish
themselves and operate in free zones and temporary,
extraterritorial duty-free zones provided that their
activities are dedicated to production. This includes
the assembly or apparel, manufacturing, processing,
transformation and commercialization of goods and
other related or complementary activities to the textile
industry, garment manufacture and maquila such as:
dyeing, cutting, stamping, knitting, silkscreening,
embroidering, washing, ironing, supervision and
quality control.
Benefits:
• Free entry (tax exempt) of machinery, equipment,
tools, parts, and accessories, implements and other
devises specifically needed for the execution of the
voluntary activity.
• Free introduction of: raw material, parts, pieces,
semi-elaborated products, intermediate goods,
containers and labels, samples and patterns, which
are needed for the execution of the enterprises
business.
• Total income tax exemption for the period they
are operating in the country; if it is a company, this
exemption is applicable to the company as well as
the individual stockholders.
• Total municipal tax exemption, Value Added Tax
and Real Estate Transfer tax for the period they are
operating in El Salvador.
• They also have the option to sell whole or part of the
production on the local or Central American market.
Any foreign company can establish itself and operate
from a Free Zone or a Temporary, Extraterritorial
Duty-Free Zone if it is involved in the production,
assembly, manufacture, processing, transformation
or commercialization of goods and services; in
addition to any service related to this international
and regional commerce. The country has 17 free
zones with services and infrastructure to develop
light and heavy industry.