El Salvador Eliminates All Taxes on Technology Innovations, AI, App Programming

El Salvador’s president, Nayib Bukele, has enacted a law that eliminates all taxes on technology innovations, software and app programming, AI, computer, and communications hardware manufacturing. The law is expected to boost the country’s technology sector, generate more jobs for its population, and attract foreign investment.

The president of El Salvador, Nayib Bukele, announced Thursday on Twitter:

I’ve just signed into law the Innovation and Technology Manufacturing Incentives Act that eliminates all taxes (income, property, capital gains, and import tariffs) on technology innovations, software and app programming, AI, computer and communications hardware manufacturing.

Commenting on the new tax law, Salvadoran Minister of Economy María Luisa Hayem described: “El Salvador is ready to attract new investments in the technology sector, and thereby generate more jobs for our population.”

El Salvador’s director of the Central American Bank for Economic Integration (CABEI), Luis Rodríguez, was quoted by Diario El Salvador as saying: “We welcome this commitment to the future of El Salvador, we are ready as CABEI to accompany this entire process.” CABEI is a regional entity established with the objective of promoting economic integration and balanced economic and social development in Central America.

Érick Chacón, president of the Salvadoran Fintech Association expressed his excitement about the bill to the publication when it was still being discussed in the Legislative Assembly weeks ago. He said that the new tax incentives would allow the ecosystem to expand and that these are important steps to position El Salvador as a technology and innovation hub.



El Salvador’s new tax law is welcomed by many on social media. Venture capitalist Balaji Srinivasan commented on Twitter: “It’s not about first world and third world anymore. It’s about ascending world and descending world. And under @nayibbukele’s leadership, El Salvador has entered the ascending world.”

Dr. Rafael Fonseca, director for Innovation and Transformational Relationships at Mayo Clinic’s campus in Arizona, tweeted:

If you are not paying attention to what is going in El Salvador you should. The sound of business moving there will be loud.

In September 2011, El Salvador became the first country to make bitcoin legal tender alongside the U.S. dollar. Since then, the country has accumulated thousands of BTC and is regularly buying bitcoin for its Treasury.

What do you think about El Salvador’s Innovation and Technology Manufacturing Incentives Act? Let us know in the comments section below.