Dear fellow Hivers & LeoFinancers,
As many of you know, my country – El Salvador – is experiencing and promoting a series of game changing transformations, under the impulse of President Nayib Bukele and the appropriately named political party he’s founded some years ago, « Nuevas Ideas » (« New Ideas »). One of the latest pieces in this litteral rebirth is a legislative text proposal about the promotion of innovation and technological manufacturing, of which the key measure is the abolition for 15 years of all taxes for computer code, software & hardware companies.
At the time of writing this article, the text that has been signed today by our President for its publication in the Official Journal was still a law proposal, but it’s very probable that if changes have been performed compared to the draft version, it’d be minor ones.
A first noticeable element is this law’s text’s shortness: 11 pages. In comparison with the infamous «Restrict» law proposal in the U.S. - 55 pages -, and many economically relevant legal drafts submitted to the American Congress, made of hundreds of pages, here concision and simplicity are put at work to allow a law to become an accessible tool, easily readable and debatable by the average citizen, not mainly by attorneys being paid to process legal raw material.
The key measure of this draft legislative decree is described in its article 7: « The beneficiaries of the present law that have a Qualification Agreement in force issued by the Ministry of Economy may opt for the following tax incentives for a term of fifteen years counted from the day following the notification of the issuance of the Qualification Agreement by the Ministry of Economy:
a. Total income tax exemption with respect to the incentivized activities;
b. Exemption from all types of Income Tax withholdings with respect to the incentivized activities;
c. Total exemption from municipal taxes on the net assets declared by the beneficiaries;
d. Exemption from the payment of Capital Gains, stipulated in Articles 14 and 42 of the Income Tax Law;
e. Total exemption from the payment of Import Duties and taxes levied on the importation of goods, inputs, machinery, equipment and tools necessary for the development of the incentivized activities ».
The article 5 explicits the possible beneficiaries of that favorable tax regime : « (...) the natural or juridical persons, national or foreign ones, that develop within the national territory a new investment in innovation projects or technological manufacturing (...) ». The concept of « new investment » excludes those performed by companies alreaday established in El Salvador, or related to operations resulting from a merger, an absorption or a restructuration.
The companies or individuals wanting to enjoy this regime have to be developing commercial activities related with at least one of these processes (art. 6):
« a. Programming, management, maintenance, consultancy and analysis of computer systems or software;
b. Development and commercialization of cloud computing and data flow services; artificial intelligence, massive data analysis; distributed ledger technology; cybersecurity solutions;
c. Technologies based on the manufacture of parts, materials and equipment or facilities, assembly, including manufacturing plants for technological equipment or hardware, semiconductors, communications technology, robotics, nanotechnology, aircraft and unmanned vehicles;
d. Engineering and systems technologies necessary to integrate basic industrial technologies into global production chains ».
Most of you will have noticed that, even if the item a) is wide enough to encompass almost any computer science related endeavor or service, including 2nd or 3rd level ones (« management, maintenance, consultancy »), hence applying to anything resembling coding a blockchain, decentralized applications or cryptocurrencies, the writers of this law proposal have doubled down, to get rid of any doubt, by mentioning « distributed ledger technology » - i.e. blockchain - as one of the innovations that this law covers.
The salvadoran entity in charge with ensuring that a company qualifies to enjoy those fiscal incentives will be the Ministry of Economy, through a case by case Qualification Agreement of which the procedure is going to be described in the coming regulations. According to the art. 17, that Ministry will also perfom in 3 years an assessment of if and how these fiscal incentives are actually helping our country to fulfill the law’s objectives, among them : « f. Improve supply chain access and interconnections and expand efforts to reduce supply chain vulnerabilities for technological innovation and manufacturing ».
I hope this spotlight on the law will have brought you some data to better identify its purposes and scope, and of course I intend to follow as closely as possible the next steps of its life cycle, mainly its entry into force (30 days after its publication in the Salvadoran Official Journal), the companies it should attract to legally establish themselves here, and evaluations of the law’s efficiency.
Source of the images:
Posted Using LeoFinance Alpha
I envy you living in an interesting country; there are so few of them! Thanks for the article.
How do the politics resonate with El Salvador's people? Do the politics have a positive impact on the lives and the happiness of many?
Hey @captainklaus , thanks a lot for your comment, and nice to Hive you here 😃.
To your question: absolutely. It's usual to mention here the "3%" of people who oppose the current government's orientations - mostly upper class families who had close ties and businesses in the previous bipartisan system - and it reflects the fact that the immense majority approves most of the political measures that have been adopted for the last 3 years.
The most spectacular is probably the shift from being a country known for its assassinations rate (for decades, around 10 per day, in a country with less inhabitants than Massachusets) to the current situation: the safest place in America. That point only now allows small shops and street sellers to not have to pay any rackett "tax" anymore, nor to consider if they can work in a particular geographic sector plagued with organized crime.
The "average citizen" is now living in another country, without having had to emigrate 🙃.
That sounds really good for El Salvador!
But those poor rich 3% :(
Yes, hehe.
If they can't stand the flavor of a freed society, they'll always find many countries where to settle down and mingle with the powers that be, even among our neighbors 😄.
They would fit right in here in good ol' corrupt Austria...
Lol. When listening to most of the "Western" documentaries dedicated to El Salvador that have been released in the last 2 years, like the "Deutsche Welle" or the "VICE" ones, I got almost the certainty that all E.U. countries - except maybe for Hungary - would provide members of our past self-proclaimed elite with a "political refugee" status 😂.
Great living in El Salvador.
Heeey galberto! In which part of the country do you live?
It'd be great to meet, and eventually organize Hive meetups here, to promote the Hive ecosystem and the Hive Lightning app 🙂.
Muy bien señor, estamos cerca de tutultepeque por Nejapa y Quezaltepeque, ojalá pudiéramos promover esto lamentablemente la gente es bastante cómoda yo he invitado muchos aquí les he regalado cuentas y ahí están tiradas.
Pero bueno por ahí estamos
Por que si has estado tanto tiempo aquí dejaste de escribir.
Ah, ¡muy bien! En el límite entre La Libertad y San Salvador, si de departamentos se trata 🙂.
Seguro, requiere esfuerzos para que más cheros se activen en Hive. Por cierto, ¿a qué mecanismo recurres, a la hora de brindarle una cuenta a alguien? He visto varias opciones.
Estaba contemplando invitar primero a personas que suelen publicar, aunque sea en Facebook, Instagram y demás plataformas centralizadas, por ser artistas, artesanos, promotores de eventos, etc. Tiendo a pensar que habrían de encontrarle con más facilidad el chiste y el encanto de Hive. ¿Cómo lo ves?
En lo personal, nunca dejé de escribir acá, jeje. Coincido en que mi ritmo de publicación ha sido muy bajo - algunos posts al año, y unas decenas de comentarios - y eso se debe a varios factores, como mi tendencia a redactar lento 🙃, el hecho que estuve activo también en plataformas similares a Hive pero que ya dejaron de existir (o donde ya no me encuentro, como noise.cash), y los mismos acontecimientos de la vida.
Pero ahora trato de orientar más de mi tiempo y mis energías hacia Hive 😃.
Hola amigo como estas?
It's good to see you back in action after a long time and thanks for following me.
muchas gracias
¡Muchas gracias a ti por tu comentario y tu saludo, @emaxisonline ! I guess we'll have many opportunities to share Threads and to enrich them, cause I'm gonna dedicate more time to Hive, from now on 🙃.
Il semble que tu es francophone, pas vrai ? Dans quel pays te trouves-tu (je voyais les photos de fleurs que tu as postées récemment, et certaines d'entre elles exigent apparemment un climat tropical) ?
Au plaisir de rêver et concrétiser ensemble !
mi amigo, I am from South East Asia and my native language is not French, my first Hive friend was a French guy, he led me into Francophone community and I really love it here.
You saw the flower, cool. Our weather is quite humid and sometimes warmest in the region, so these flowers grow smoothly here.
Thanks and best regards
!LUV
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