The Legislative Assembly of El Salvador approved a bill to Eliminate taxes for companies that develop artificial intelligence (AI) and other computer programming work for 15 yearsin an attempt to make the country a more attractive technology destination.
The tax reduction for technology companies was promoted by the president, Nayib Bukele, who presented it for the first time at the end of last month to try to “contribute to economic growth and sustainable development.”
The deputies approved it with 69 votes in favor among the 84 members of the unicameral legislature. Bukele’s New Ideas party dominates the country’s Congress.
The Law for the Promotion of Technological Innovation and Manufacturing stipulates the exemption from Income Tax and “all types of withholdings” of this tax.
The regulation authorizes the “total exemption from municipal taxes on the net assets declared by the beneficiaries” and from the payment of the Capital Gain. It also includes exemption from customs duties on the importation of goods, raw materials, machinery, equipment and tools for “the development of the incentivized activities”.
The activities that the new regulation encourages are programming and software development, artificial intelligence, massive data analysis, cybersecurity solutions, manufacturing-based technologies in manufacturing for hardware equipment, among others.
The legislation also enables the signing of “bilateral agreements with advanced nations on innovation and technological manufacturing.”
These new tax breaks for the fledgling tech sector are just the latest efforts by Bukele and his allies to rebrand the Central American country as an emerging hub of innovation.
El Salvador, which became in September 2021 in the first country in the world to use bitcoin as legal tender, it also approved in January a law to regulate emissions in digital assets.
With information from EFE and Reuters
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