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El Salvador Import Regs.: FTZs

This forum addresses the import regulations and trade information of El Salvador.

El Salvador Import Regs.: FTZs

Postby bridgat » Tue Nov 18, 2008 5:35 am

The Law on Export Promotion (Legislative Decree No. 81) introduced the free zone program. It was however repealed on March 15, 1990, by the Law on the Free Zone and Tax-Free Area Regime (Legislative Decree No. 461), which was then repealed by the Law on Industrial and Marketing Free Zones (Legislative Decree No. 405) on September 3, 1998 and its amendment (Legislative Decree No. 464).

The establishment, administration and operation of free zones must be authorized by the Ministry of the Economy. The Ministry of Finance is responsible for surveillance and monitoring of the tax regime in these zones. Free Zones are privately administered, but have tax and customs officials present at the facilities.

Businesses must obtain a license to operate within the Free Zone regime from the Ministry of Economy and the Ministry of Finance. Where enterprises are unable to locate in free zones for technical reasons, but otherwise satisfy the criteria, they may apply to the Ministry of Economy to be declared an "Inward Processing Warehouse."

The advantages for users of free zones or inward processing warehouses include exemption from:

- import duties on machinery, equipment, tools, parts and accessories, implements, etc.

- import duties on lubricants, catalysts, reagents, fuels and any other consumables needed for the productive activity

- income tax during the period in which they carry out their operations in the country

- municipal taxes on company assets and net worth, for the period in which they carry out operations in the country

- tax on the transfer of real property used for relevant activities

In the case of goods and services produced in free zones, import duties, income tax, municipal and VAT taxes, would apply. Special local content rules apply to textiles.

Tax concessions and incentives do not apply to certain activities, in particular: hotels; travel agencies and airlines; air, sea, and land transport; financial activities; fishing, except tuna fishing; mining; and the production and marketing of sugar, ethyl alcohol, and any product that contains them.
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