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NEW LAWS IN EL SALVADOR AIMED AT TECHNOLOGICAL AND DIGITAL DEVELOPMENT
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GENERAL LAW FOR THE DIGITAL MODERNIZATION OF THE STATE
The purpose of this law is to establish the necessary provisions for the implementation, development, digital transformation and modernization of the Salvadoran State, recognizing the international commitments that the State of El Salvador acquires for this purpose and in particular those derived from the Strategic Alliance signed between the Government of the Republic of El Salvador and Google LLC, as well as the different commitments, contracts, agreements or instruments that derive from it and that promote foreign investment and grant social and/or economic benefits for El Salvador. Any State body is empowered to sign any contract, strategic alliance or document with Google LLC to consolidate this law of digital modernization of the State, assigning a budget of at leastFIVE HUNDRED MILLION UNITED STATES DOLLARS (USD $500,000,000.00).It regulates the budget allocation and documents required to sign the contract with each state body for the assignment of compliance with the law. Additionally, it regulates the dispute resolution process for each contract entered into between the state and the strategic partner.
LAW FOR THE PROMOTION OF INNOVATION AND MANUFACTURING OF TECHNOLOGIES
The purpose of this law is to contribute to the country's economic growth and sustainable development by strengthening competitiveness through the promotion of innovation and the manufacturing of technology developed in the country. This will foster the growth of a skilled workforce capable of generating advanced technological products and services, while also strengthening participation in supply chains essential for the development of the technology industry globally. The incentivized entities and activities, whether natural or legal persons, national or foreign, that carry out commercial activities in related productive sectors, will be the following:a)Programming, management, maintenance, consulting and analysis of computer systems or software;b)Development and commercialization of cloud computing and data flow services; artificial intelligence, big data analytics; distributed ledger technology; cybersecurity solutions; quantum computing;c)Technologies based on the manufacturing of parts, materials and equipment or facilities, assembly, including manufacturing plants for technological equipment or hardware, semiconductors, communications technology, robotics, nanotechnology, aircraft and unmanned vehicles;d)Engineering and systems technologies needed to integrate basic industrial technologies into global production chains;and)New sources of energy generation and storage, which do not currently exist within the national energy matrix, which will be subject to the corresponding authorizations and concessions as appropriate;f)Research and Development of new technologies. The tax incentives granted by this law to all beneficiaries who have a valid Qualification Agreement are the following:FIFTEEN YEARS, counted from the day following the issuance of the qualification agreement by the Ministry of Economy:a)Total exemption from Income Tax on incentivized activities;b)Exemption from all types of Income Tax withholdings for incentivized activities;c)Total exemption from municipal taxes on the net assets declared by the beneficiaries;d)Exemption from the payment of Capital Gains, stipulated in articles 14 and 42 of the Income Tax Law;and)Total exemption from the payment of import duties and taxes levied on the importation of goods, supplies, machinery, equipment, and tools necessary for the development of the incentivized activities. The aforementioned exemption applies only to goods essential for the benefited activity, and beneficiaries must be duly identified as being for exclusive use for the activity in question. Similarly, the quantity of goods to be imported must be proportional to the installed capacity of the beneficiary through which the incentivized activity will be developed. The exemptions do not extend to the importation of firearms, ammunition, goods for consumption by company directors, partners, or staff, their families, or related companies, and current assets. The President of the Republic or the Minister of Foreign Affairs may, upon recommendation of either the Ministry of Economy or the Investment Promotion Office, enter into bilateral agreements with advanced nations in the areas of innovation and technological manufacturing, with the aim of promoting joint programs and investments in these areas or the creation of joint programs or funds for this purpose. We hope you find this opinion useful. We remain at your disposal for any questions and/or queries regarding this matter. [/vc_column_text][vc_column_text]Written by: Dr. Adriana Portillo[/vc_column_text][/vc_column][/vc_row]
