The regional policy of fiscal incentives is designed to allow trade to be more competitive in the Central American region on a basis of a fair competition. This competition would not be based on artificial differences of costs due to different national laws, but on the differences in the real conditions defining the costs.
The equalization of fiscal incentives means that the law will grant equal privileges to the same kind of business enterprises fulfilling equal duties and being in similar conditions. These conditions refer to the factors determining the qualification, classification and privileges assigned to such enterprises.
Free Trade Zones – (Industrial Parks)
In view of the Salvadorans’ well known skilled labour, many years ago North American and Asian companies were established in El Salvador especially in the apparel and integrated circuits industry. With the growing of this kind of foreign investment the Government took measures in granting franchises and fiscal exemptions for the investors interested in the Free Trade Zones; at the present time, 8 industrial parks have been built for these purposes with 105 established companies and other 6 parks are in construction . The companies incorporated under this regime have tax exemption for fifteen years in the operation and administration and ten years for users, Income tax exemption, Value added tax (VAT) exemption, Municipal tax exemption, Duty free import of raw materials, machinery, equipment and intermediate goods and option to sell all or part of production to the Central American or local market.
A large industrial park is being built at the port of Cutuco in the Gulf of Fonseca and will be fully operational in mid 2009; this park will increase the presence of many other companies contributing to the economic growth of the country and the region.
Free Trade Agreements
El Salvador’s trade and investment structure is one of the most progressive in the world. It is founded upon solid international principles designed to encourage investment, protect intellectual property rights and promote exports. Based on these principles El Salvador has ratified free trade agreements with the rest of the Central America countries, Panama, Chile, Colombia, The Dominican Republic, Mexico, The United States of America and Canada.