The International Services Law in El Salvador [Podcast]
Today’s guest is Jessica Bukele of PROESA, the export and foreign investment promotion arm of the Government of El Salvador.
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The Central American Group: Hello. Welcome to another edition of the Central American Group’s podcasts. These are recordings that we do of conversations with individuals that are expert on economic issues in Central America. Today we have with us an individual that is with the Salvadoran Export and Investment Promotion Agency, which in Spanish is called PROESA. She is going to discuss the International Services Law of El Salvador with us. Her name is Jessica Bukele. I’d like to say hello to you. Good morning Jessica. Can you tell us a little bit about yourself and your organization?
Jessica Bukele: Good morning. Thank you for this opportunity. Yes, of course. Hello everyone. My name is Jessica Bukele and I am the Offshore Services Investment Advisor at PROESA. PROESA is the export and investment promotion agency in El Salvador. It is an autonomous government institution that is responsible for export promotion and investment, country brand, and public-private partnerships. PROESA’s main goal is to generate economic growth and jobs by attracting foreign direct investment and promoting the expansion of Salvadoran companies abroad. But, specifically, I am in charge of attracting services companies to the country and promoting the benefits of the International Services Law of El Salvador. I invite you all to explore El Salvador as your next investment destination. The experts at El Salvador’s investment promotion agency will provide you the support, technical assistance, and required information for your business initiatives in our country.
The Central American Group: You mentioned the International Services Law of El Salvador. Can you please tell us what that is and how foreign companies that are investing in El Salvador can take advantage of it?
Jessica Bukele: The International Services Law of El Salvador is the country’s main investment and export promotion strategy for service companies. The International Services Law of El Salvador was issued on October 11, 2007, in order to regulate the establishment and operation of service parks and service centers, as well as the benefits and responsibilities of the owners of companies operating in the country. Since 2007, El Salvador’s main goal has been to attract new service companies to the country and to help them improve their competitive position. Additionally, the country seeks to help investors find solutions to the obstacles that these companies face in terms of their operations, tax incentives, and legal issues.
The Central American Group: Are there any tax benefits under the International Services Law of El Salvador?
Jessica Bukele: Yes, yes, of course. It is very important to mention. The International Services Law of El Salvador took its reference from Panama’s law for logistics companies and Uruguay’s International Service Law for offshore services parks. El Salvador is the only country in Central America to have a separate law for services companies. Usually, there are free zone laws. In free zone laws in Central America service companies are included. The International Service Law of El Salvador is separate from the free zone law.
The Central American Group: Could you please tell us how large the service sector is in El Salvador?
Jessica Bukele: Yes, of course. We have offshore services business companies. There are at present approximately seventy companies of this kind operating under the International Services Law in El Salvador. Logistics services companies, in particular, have competitive advantages. If a logistics company establishes operations in El Salvador, the International Services Law allows for storage, gathering, consolidation, and deconsolidation of third party’s merchandise for the purpose of being exported or reexported. For example, in El Salvador we allow labeling and repackaging if there is no change to the value of the product. The merchandise does not lose its country of origin and is free of tax. This is something that makes us different from the rest of Central America. There are a lot of opportunities not only for offshore business services companies, but also for logistics services in the country.
The Central American Group: OK. As far as companies that operate under the International Services Law of El Salvador are concerned, you mentioned logistics. Are there any other companies that operate under the ISL?
Jessica Bukele: Yes. We have cinematography, tele-medicine, and medical tourism. We have a lot of other companies, but logistics and, especially, offshore business services constitute the sectors that have been growing at a double-digit rate for the last ten years. These are the types of companies that we primarily focus on.
The Central American Group: Can you tell us of a specific success story related to a company operating under the International Services Law of El Salvador?
Jessica Bukele: Yes. For instance, the International Services Law of El Salvador has been set up with incentives and benefits granted to services companies that invest and establish themselves in El Salvador. These benefits include a total exemption from income tax, a full exemption from customs duties, and taxes related to the importation of machinery and equipment that are required for the incentivized activity. We also have a total exemption from municipal taxes.
The Central American Group: That sounds like it would be very, very beneficial for people that want to do business in El Salvador to take advantage of those incentives.
Jessica Bukele: Yes, and we also have a competitive advantage in this area, because El Salvador is the only country that promotes these benefits for the entirety of the time that the company has operations in the country. These benefits have no time limit. That is a very big advantage that investors usually favor from our country.
The Central American Group. I know that you probably have detailed information or a little more information about this on your organization’s website. If some of our listeners would want to go to that website, what would be the address that they would have to access?
Jessica Bukele: The website is www.proesa.gob.sv.
The Central American Group: Before asking your email address, I would like to ask if there is any other point that you would like to bring up regarding the International Services Law of El Salvador to make sure that our listeners are filled in?
Jessica Bukele: Yes, of course. With respect to social media, we are also on Twitter. You can follow us on Facebook, as well. Please visit us on social media so that you can get more specific information on the International Services Law of El Salvador and other issues.
The Central American Group: Would you be so kind as to provide your personal email address so that interested parties can contact you directly?
Jessica Bukele: Yes, of course. My email address is email@example.com. Please do not hesitate to contact us for further information or for further assistance.
The Central American Group: Jessica, I want to thank you very much for speaking with us. We wish you good luck and hope that you have a very nice day.
Jessica Bukele: Thank you. Have a great day and thank you for the opportunity. It has been my pleasure.