Update (2026): On January 14, 2026, the Legislative Assembly approved a new amendment to the International Services Act (Legislative Decree No. 497). Review Our Analysis of the 2026 Reform to learn about the current rules.
El Salvador continues to strengthen its legal framework to position itself as a competitive destination in the region. Recently, the Reforms to the International Services Law and to the Industrial Free Trade Zones and Marketing Law (LZFIC) have been implemented. These modifications have the primary objective of promoting economic and social development by facilitating tax incentives and encouraging new investments.
As expert attorneys in El Salvador, at Legal Spot we analyze the most significant changes that directly impact investors:
Benefits of the International Services Law reforms
The International Services Law reforms are designed to expand opportunities for natural or legal persons, both national and foreign, operating under this regime.
- Plurality of activities: Beneficiaries can now carry out one or more incentivized activities simultaneously, provided they meet the most demanding investment and employment requirements among the requested activities.
- Flexibility in the initial phase: Articles 23 and 24-A have been amended to provide greater operational flexibility during the first few months of the investment.
- For business process services, the minimum investment is USD 150,000.00 at Service Parks and USD 250,000.00 at Service Centers.
- For medical and hospital services, the minimum investment ranges from USD 1,000,000.00 and USD 2,000,000.00, which must be carried out starting in the first year of operations, as appropriate.
- Green area management: A more flexible distribution of green areas (30% of the total) is introduced, allowing a portion to be located outside the Service Park under compensation schemes.
Free Trade Zones Law (LZFIC): Extension of tax benefits
For the industrial and manufacturing sectors, the LZFIC presents attractive changes that seek to consolidate existing investments and attract new capital.
- Extension of the exemption period: One of the most relevant developments is the possibility of requesting an additional 10-year period of full tax exemption once the initial period has expired, representing a 5-year increase compared to the previous law.
- Requirements for the extension:
- Developers must have invested in expanding the total area of the free trade zone.
- Users and Active Improvement Deposits (DPA) must verify a a 100% increase in your initial investment or meet specific employment eligibility requirements (with investments of at least USD 500,000.00 or USD 800,000.00, respectively).
- Grace period: A 2-year grace period is established after the expiration of the original agreement for companies to make the necessary adjustments and investments to continue enjoying the benefits.
Mobility and Strategy: DPA and Service Parks
The reform also introduces greater operational versatility:
- Regime change: It is now possible to request a change of beneficiary type from Free Trade Zone User to DPA and vice versa.
- Cross-installation: Free trade zone users are allowed to operate in service parks, receiving the same legal treatment as if they were in a free trade zone.
The versatility offered by these International Services Law reforms allows companies greater strategic mobility between tax regimes.
Contact us at legalspotsv and discover how your company can benefit from these International Services Law reforms.
Navigating the tax incentive regimes in El Salvador requires precise legal advisory to ensure compliance with the investment and employment requirements demanded by the Ministry of Economy.
At Legal Spot, we ensure that your company takes full advantage of the competitive benefits of the new International Services Law reforms in El Salvador.
Contact us at legalspotsv and discover how your company can benefit from these International Services Law reforms.
