Central American country frees IT companies from taxes

Crypto-friendly El Salvador is looking to become a tech hub

El Salvador’s President Nayib Bukele announced on Thursday the enactment of a law that eliminates taxes on innovative technologies, such as software creation, coding, and artificial intelligence (AI), among others. Bukele is eager to turn his country into Latin America’s tech leader. 

The law signed by the Salvadoran president will exempt technology companies from all taxes for at least 15 years, according to Binance.

“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,” Bukele wrote on Twitter. 

The law is expected to “contribute significantly to the country’s economic development,” creating more jobs for young people. It could also create opportunities for the development of AI.

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. pic.twitter.com/rZtGzPgVzW

— Nayib Bukele (@nayibbukele) May 4, 2023

The 41-year-old Bukele has been betting on emerging technologies to improve the country’s economy. El Salvador became the first nation in the world to embrace Bitcoin as legal tender in June 2021, defying disapproval from the International Monetary Fund. The move has sparked widespread controversy, but El Salvador's government has been actively buying Bitcoin, despite the drop in crypto prices following last year’s bankruptcies and collapses in the sector. Bukele has also made progress on plans to use El Salvador’s volcanoes as a power source to mine the digital cryptocurrency.

Find more stories on economy and finance in TROIB business