Free Trade Zones
Tax Free Zones in El Salvador
The Central American Group (CAG) owns and operates two of the most prominent free trade zones in El Salvador. They are the Zona Franca Internacional and the Zona Franca San Marcos. These two FTZs were developed under the law that governs the Free Trade Zone regime that was implemented by the Salvadoran government in 1998.
Companies that locate manufacturing or service industries in the Central American Group’s free trade zones in El Salvador enjoy the following benefits:
- The ability to import machinery, equipment, tools, spare parts, accessories and other equipment that is required to execute activities that have been authorized under the Free Trade Zone Law;
- The Importation free of duty of items such as raw materials, parts, component parts, intermediate products, packaging, labels, and samples;
- The duty-free importation of any required lubricants, catalysts, reactants, and fuels that are needed by the investing company;
- The exemption from income tax, municipal tax, and property tax for a period of fifteen years if the company is located in a metropolitan area of El Salvador. If the company is located in a rural area, the exemption is for a total of twenty years;
- The free trades zones in El Salvador regime also exempts taxes on certain real-estate transfers.
In addition to export activities in Central America, businesses located in free trade zones in El Salvador are permitted to sell goods or services in the country’s domestic market. These goods or services are liable for the payment of applicable taxes, however.
Two Free Trade Zone locations
The Central American Group’s two foreign trade zones in El Salvador have been in operation for more than twenty years and house a diversity of clientele. Companies that locate in the Zona Franca Internacional can:
- benefit from strategically beneficial location minutes from the country’s international airport and near the Comalapa Highway;
- operate under a build-to-suit, rent, or purchase arrangement;
- expand existing operations on 40 acres that are available for immediate construction.
- establish and maintain operations in an industrial park that is occupied by more than 1,000,000 sq. feet of finished manufacturing space;
- utilize the service of an abundant and qualified labor force.
The second FTZ that the Central American group owns and operates is the Zona Franca San Marcos. It is where the Central American Group has its headquarters.
As one of the two free zones in El Salvador that is a property of the CAG, the Zona Franca San Marcos was one of the first in the country. As is the case with the Zona Franca Internacional the FTZ San Marcos was under construction beginning in 1998. It is located at kilometer 9.5 of the highway that is connected directly with the country’s international airport. The Zona Franca San Marcos has approximately 580,000 square feet of industrial space under roof in which are employed more than 8,000 individuals. Most of the workforce is engaged in the production of textile products.