El Salvador has taken the bold step of reviving the tech industry by removing all taxes (income, ownership, capital gains and import tariffs) on technological innovations such as software programming, coding, applications and artificial intelligence development.
This step was announced by President Nayib Bukele on Twitter on March 23, 2023, and then a bill was submitted to the Legislative Assembly by the Minister of Economy, María Luisa Hayem, on March 30, 2023.
El Salvador No Longer Taxes the Technology Sector
The minister explained that the country's activities will encourage companies in the software, hardware, technological manufacturing, systems and programming service sector, among others.
The law aims to promote the development of the technology industry in El Salvador by providing incentives for 15 years to companies dedicated to software services such as programming, artificial intelligence and model and systems development, cloud and data storage related services.
The law also covers technological manufacturing such as communications technologies, semiconductors, nanotechnology, robotics, unmanned vehicles and motor vehicles.
The startup has received praise from some international names in the tech industry, such as Changpeng Zhao, CEO of Binance, one of the world's largest cryptocurrency exchanges. Zhao wrote on Twitter:
“Congratulations to this man/country. The best leaders reduce taxes/fees/costs.”
👏 to this man/country. The best leaders reduce taxes/fees/costs. https://t.co/5N3cMUPyeT
— CZ 🔶 Binance (@cz_binance) March 31, 2023
El Salvador is pursuing an ambitious plan to modernize its infrastructure and attract foreign investment in various sectors. The country also accepted Bitcoin as a legal tender in September 2021, making it the first country in the world to do so.
*Not investment advice.
