Doing Business In El Salvador

Doing Business in El Salvador

Doing business in El Salvador means initiating operations in a free market, export-oriented economy that is strategically located between North and South America. 

The country has a population of approximately 6.5 million inhabitants and has an economy with a GDP of US $25.8 billion.  The per capita income of the country is US $4,273 annually. 

Doing business in El Salvador has become easier given the fact that the country has one of the freest economies in Latin America.  It offers macro-economic stability due to its use of the US dollar as its national currency and offers openness to both foreign trade and investment.  In El Salvador there is no restriction on foreign ownership and mergers, as well as on acquisitions and joint-ventures.  The country has duty-free access to 1.2 billion consumers due to the free trade agreements that it is a party to.

Companies doing business in El Salvador that are geared toward manufacturing and exporting goods can set up operations in one of the country’s free trade zones (FTZs).  There are seventeen areas countrywide that carry this designation.  They offer a number of fiscal benefits that are available to companies that locate in one of El Salvador’s FTZs.  Among them are:

  • a full exemption from income taxes;
  • a full municipal tax exemption;
  • duty-free import of machinery, equipment, intermediary goods and raw materials that are used in the manufacturing process;
  • a VAT exemption;
  • an exemption from real-estate transfer taxes when land is intended to be used for productive activities.

The infrastructure that is available for use by companies doing business in El Salvador in the Zona Franca International includes:

  • a 15 KVA power substation;
  • an autonomous water supply and wastewater treatment plant;
  • fiber-optic telecommunications;
  • offices for customs operations and human resources administration.

 

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