The Foreigner's Checklist: Actually Incorporating in El Salvador and Getting Qualified
Part one made the case: a qualifying technology company in El Salvador pays zero income tax, zero capital gains, zero municipal tax on net assets and zero import duty for fifteen years, and the law is explicitly open to foreigners with no residency requirement.
This is the boring half — and the half that decides whether you actually get it. The company, the paperwork a foreigner needs that a citizen doesn't, the approval clock, and what you're signing up to do every four months for the next fifteen years.
The company itself is almost a non-event
The vehicle is the S.A.S. — Sociedad por Acciones Simplificada, added to the Commercial Code by Legislative Decree 905. It was clearly designed by someone who had suffered through incorporating the old way:
- One shareholder is enough — an individual or a company.
- Minimum capital: one dollar. You set the figure freely, and you have up to two years after registration to actually pay in subscribed capital.
- No public deed, no notary. Corporate acts are done on Commercial Registry forms.
- 100% online through CreaEmpresa.gob.sv, with the resolution delivered electronically.
- Limited liability, and the name must end in "S.A.S."
Registration typically resolves in a handful of business days with a clean form. The legal entity exists the moment it's inscribed.
Be clear about what the S.A.S. simplifies, though: it strips out corporate formalities, not tax ones. Your NIT, VAT registration, formal accounting, external auditor and employer obligations are the same as any other company. The simplification is at the registry, not at the tax office.
You will also want the auditor early. Not to incorporate — for the qualification application and the reports that follow.
What changes when you're not Salvadoran
Most guidance about this is written for a Salvadoran. Being a citizen makes some steps trivial that are not trivial for you.
Identity. No DUI, so it's your passport or a valid resident card. This is written into the regulation rather than left to practice: "en caso de ser extranjero, deberá presentar pasaporte o carné de residente vigente", and documents issued abroad "deberán estar debidamente autenticados o apostillados y acompañados con las respectivas diligencias de traducción" (Reglamento, Art. 5). Notary-certified copies are accepted. Budget real calendar time for apostilles in your home country — this, not the Salvadoran side, is usually the long pole.
A local representative is mandatory. Not for the incentive — for tax purposes. You need a fiscal domicile in El Salvador and an attorney-in-fact with sufficient powers and permanent physical presence in the country. It does not have to be a shareholder; a local lawyer or a trusted person with a well-drafted power of attorney is the normal arrangement, and your law firm's office can serve as the fiscal domicile.
You do not need to move. Incorporation, the qualification application, and the ongoing reports are all electronic, and all of them can be done through your attorney-in-fact. Full foreign ownership from abroad is permitted.
The bank account is the friction point. Everything above can be done remotely. Banking KYC usually cannot. Ask your bank directly whether it will open through an attorney-in-fact; if not, plan one short trip and use it for both the bank and obtaining a certified electronic signature — that requires presence once, and afterwards lets you sign everything remotely, permanently.
If I had to name the single thing that turns this from a two-month project into a six-month one, it's apostilles and the bank, in that order. Neither is legally hard. Both are slow, and both are outside El Salvador's control.
The month
With a clean file, the qualification process is fast and the deadlines are in the regulation, not at an official's discretion. Every row below is Reglamento, Art. 6:
| Step | Statutory deadline |
|---|---|
| Application admitted (or corrections requested) | 5 business days |
| Tax/customs opinion on solvency | 10 business days — silence favors the applicant |
| Ministry's technical opinion on the project | 10 business days from admission |
| Resolution — the Acuerdo de Calificación issued | 5 business days |
| Notification to tax and customs authorities | 3 business days |
Roughly one month. And note that middle line — it's not folklore, it's in the text: if the directorates don't answer in ten days, "se entenderá que el solicitante del beneficio de la Ley, no tiene ninguna obligación tributaria pendiente." That is an unusually applicant-friendly piece of drafting.
The application is filed electronically with the Ministry of Economy at edigital.economia.gob.sv. Alongside the form you'll submit a process flow diagram, an executive summary of the investment project, your tariff-code list with justification, projected investment and timeline, target market, your R&D+i percentage, and jobs to be created — the full list is Reglamento, Arts. 4 and 5.
Remember the four-month rule from part one: your stated start of operations can't be more than four months out (Reglamento, Art. 4 lit. k). This is the step that has to be timed against your launch, not against your incorporation.
What it costs you to keep
The exemption is not fire-and-forget:
- A report every four months — January–April, May–August, September–December — due by the 15th of the following month. It covers investment made, R&D+i disbursements, imports, payroll, and local versus export sales. The Ministry can require auditor certification. (Reglamento, Art. 16)
- Keep the 5% R&D+i genuinely funded, and be able to show where it went. (Ley, Art. 10 lit. f; Reglamento, Art. 14)
- Separate accounting records isolating the incentivized income. (Ley, Art. 10 lit. c)
- An online inventory registry for duty-exempt imported goods, available to the Ministry and customs. (Reglamento, Art. 11)
- Lock-ups on exempt imports: machinery is non-transferable for 5 years, equipment and tools for 2, counted from entry into the country. (Reglamento, Art. 12)
- Inspections by the Ministry of Economy and the Ministry of Finance. (Reglamento, Arts. 13 and 17)
- Changing your activity, premises, or tariff codes requires a formal modification of the Acuerdo. (Reglamento, Art. 7)
Note the cadence: three reports a year, not four. Cuatrimestral means every four months, and people used to quarterly filing get this wrong.
None of this is exotic for a company with a real accountant. All of it is fatal if you were planning to run a letterbox.
The order I'd do it in
- Incorporate the S.A.S. — before the product ships, so the company's entire history is the project and the auditor's prior-activities report is empty.
- NIT, tax registration, company registration, initial balance filed, external auditor engaged.
- Sort apostilles and the bank in parallel — they're the slow ones.
- Build. Write the executive summary and process flow as you go, not at the end.
- When launch is inside four months: file the qualification application.
- Approval in about a month. Fifteen years start the day after you're notified.
Verify this yourself
I don't want you to take any of this on my word — it's the kind of post where a wrong number costs someone real money. Every factual claim across both parts traces to one of two documents, and both are free and public:
- The Ley — Ley de Fomento a la Innovación y Manufactura de Tecnologías, Legislative Decree 722, D.O. N.º 81, Tomo 439. PDF, Asamblea Legislativa
- The Reglamento — Executive Decree 25, 2 June 2023. PDF, Ministerio de Economía
| Claim | Where to check it |
|---|---|
| 15 years; income tax, withholdings, municipal tax on net assets, capital gains, import duties | Ley, Art. 7 |
| Import exemption limited to indispensable goods; excludes current assets and personal consumption | Ley, Art. 8 |
| Which activities qualify | Ley, Art. 6 |
| Open to nationals and foreigners; no stacking with free zones or international services parks | Ley, Art. 5 |
| Minimum 5% of the operating budget on R&D+i | Ley, Art. 10 lit. f |
| Separate accounting records for incentivized income | Ley, Art. 10 lit. c |
| Where the 5% may be spent (own projects, startups, academia, public programs) | Reglamento, Art. 14 |
| "New project" definition; expansion and new clients/markets excluded | Reglamento, Art. 3 lit. c and d |
| What the application must contain | Reglamento, Art. 4 |
| Start of operations ≤ 4 months after filing | Reglamento, Art. 4 lit. k |
| Passport/resident card for foreigners; apostille + translation | Reglamento, Art. 5 |
| The whole deadline table, and tax-authority silence favoring the applicant | Reglamento, Art. 6 |
| Modifying the Acuerdo | Reglamento, Art. 7 |
| Online inventory registry | Reglamento, Art. 11 |
| 5-year / 2-year transfer lock-ups | Reglamento, Art. 12 |
| Inspections | Reglamento, Arts. 13 and 17 |
| Four-monthly report: periods, 15th-of-next-month deadline, contents | Reglamento, Art. 16 |
Two claims do not come from those decrees, so treat them separately. The S.A.S. rules (one shareholder, one-dollar capital, no notary, online filing, two years to pay in capital) come from Legislative Decree 905 reforming the Commercial Code — PDF, and see CNR. The 30%/25% corporate rate the exemption replaces comes from PwC Tax Summaries.
Filing portals: CreaEmpresa for the company, Economía Digital for the qualification. And the standing disclaimer from part one applies here too: I'm an engineer, not your lawyer. Validate with a Salvadoran firm before you file.
One practical note if you go fetch these with a script rather than a browser: the Asamblea's server sends eight stray bytes before the %PDF header, so the download reads as raw data and most parsers refuse it. tail -c +9 file.pdf > fixed.pdf and it opens fine.