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22 August 2023

El Salvador's Congress approves bills to reform International Services Law and Free Trade Zones Law

  • 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 relates to the extension, scope and definitions of certain incentivized activities, in addition to incorporating new concepts such as "vertical services parks" and the characteristics of the regulated areas where ISL entities can carry out their operations. (A "vertical service park" includes an isolated area without resident population where the goods introduced and the services provided are considered outside the national customs territory with respect to import duties and taxes.) 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.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young El Salvador

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2023-1434

 
 

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