LEGISLATION & OVERALL SCOPE

 The law aims to contribute to the economic growth and sustainable development of the country by promoting innovation and technology manufacturing within the national territory. 

 The Ministry of Economy is responsible for implementing and regulating the law, while the Ministry of Finance is responsible for overseeing customs and fiscal matters related to the law. 

 The law applies to individuals or legal entities, both national and foreign, engaged in commercial activities in sectors related to technology manufacturing and innovation. 

 The law seeks to accelerate technological innovation and manufacturing, develop innovative materials and processing technologies, lead advanced technology manufacturing in Latin America, expand and diversify the Salvadoran workforce for technological manufacturing, promote education and training in advanced technological manufacturing, improve supply chain access and interconnections, strengthen innovation ecosystems and commercialization, and provide appropriate incentives through tax reduction and other incentives. 

 The law provides several fiscal incentives for qualified beneficiaries, including total exemption from income tax, exemption from income tax withholdings, exemption from municipal taxes on net assets, exemption from capital gains tax, and exemption from import duties and taxes on imported goods, machinery, and equipment necessary for the incentivized activities. 

 To be eligible for the incentives, interested parties must meet certain requirements, such as being registered with the Salvadoran tax authority, engaging in qualified activities, and obtaining a valid Qualification Agreement from the Ministry of Economy. Beneficiaries are also obligated to comply with specific obligations, including separate accounting records, compliance with permits and authorizations, and allocation of a minimum percentage of the company's budget to research and development. 

 The law encourages the promotion of bilateral agreements with advanced nations in innovation and technology manufacturing, as well as cooperation with multinational companies for joint investments in industrial research and development. 

 The law establishes different categories of infractions (less serious, serious, and very serious) and corresponding penalties, including fines and revocation of benefits. The Ministry of Economy is responsible for the administrative procedures and sanctions. 

 The Ministry of Economy is required to evaluate the effectiveness of the fiscal incentives after three years of implementation. If deemed necessary, the ministry can propose amendments to the law to improve the incentives while respecting acquired rights.