El Salvador’s Congress recently approved amendments to the International Services Law and the Free Trade Zones Law, making substantial modifications to the two main free-trade regimes for goods and services.
Taxpayers and the general audience should review the approved bills to assess their potential impact and incentives granted.
On 15 August, El Salvador’s Congress approved bills to reform the International Services Law (ISL) and the Free Trade Zones Law (FTZL).
International Services Law reforms
The bill to amend the ISL introduced changes related to the extension, scope and definitions of certain incentivized activities, in addition to incorporating new concepts such as "vertical services park" and the characteristics of the regulated areas where ISL entities can carry out their operations. Also, the reform introduced new provisions on remote work for employees of ISL entities.
Free Trade Zones Law reforms
Among the main reforms to the FTZL, are new incentives for activities within this regime related to the production and commercialization of food products.
Upcoming procedures
Following the approval by the Congress, the bills must be ratified by the President of El Salvador and published in the country’s Official Gazette for their entry into force.
For more details on the bills, please refer to EY Global Tax Alert, El Salvador's Congress receives bills to amend International Services Law and the Law for Industrial and Commercial Free Zones, 4 August 2023.
For additional information with respect to this Alert, please contact the following: