A growing number of executives are looking at company formation in El Salvador, but why? There are a lot of opportunities in this rapidly-changing country. We take a look at six reasons to start your business in El Salvador, from its strong economy to low taxes.
Key takeaways
| A strong and dynamic economy | El Salvador operates under solid free market lines, with a young internal market. |
| Open to international investment | The country allows 100% foreign ownership when you start your business in El Salvador. There are also various free trade agreements in place. |
| Good for startups | Start your business in El Salvador and you will be in an environment designed to promote new companies and innovation. |
| A range of healthy sectors | Manufacturing, especially clothing, tourism and energy are all showing solid growth in El Salvador. |
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6 reasons to start your business in El Salvador
Below are six strong reasons why it’s a great idea to start your business in El Salvador:
- Free market economy.
- Fast-growing marketplace.
- Significant trade opportunities.
- Low tax regime.
- Minimal entry barriers.
- Startup ecosystem.
1 – Free market economy
With its free market economy, El Salvador offers a favorable investment climate. The absence of excessive government regulations allows businesses to thrive and compete in an open marketplace.
2 – Fast-growing marketplace
The country’s fast-growing marketplace is another compelling reason to invest. With a young and tech-savvy population, there is a growing demand for various goods and services, creating ample opportunities for businesses to expand and succeed.
3 – Significant trade opportunities
The country has established trade agreements with various countries, providing access to larger markets and facilitating international business transactions.
4 – Low tax regime
The low tax regime in El Salvador is another compelling reason to invest. The government has implemented policies that promote investment by offering competitive tax rates, allowing businesses to maximize their profits and reinvest in further growth.
5 – Minimal entry barriers
El Salvador boasts minimal entry barriers for investors. The government has streamlined bureaucratic processes and implemented investor-friendly policies that facilitate establishing businesses, reducing red tape and making it easier for investors to enter the market.
6 – Startup ecosystem
The small Central American country ranks just outside the world’s top 100 startup locations. However, With the recent enactment of the Innovation and Technological Manufacturing Promotion Law, San Salvador has entered the prestigious Global Startup Ecosystem Index (GSEI.) This new law is designed to encourage more foreign investment in El Salvador by offering significant tax benefits.
What are the top business industries in El Salvador?
El Salvador is a country with a diverse range of industries offering excellent investment opportunities. Here are some key sectors where investors can benefit:
- Manufacturing: El Salvador boasts a mature plastics and textile industry. With its well-established infrastructure, the country presents a prime destination for the outsourcing needs of international companies. It exports over seven million US dollars of medical devices each year.
- Agribusiness: El Salvador’s tropical climate and diverse microclimate make it an ideal location for agribusiness. As well as catering to specific market niches, it offers opportunities for food production and processing. Agribusiness accounted for 19% of the share of total exports in 2022.
- Tourism: The country is known for its amazing waves, recognized worldwide as some of the best for surfing. It has many natural attractions, including beaches with some of the best surfing breaks on the Pacific Coast, lush forests shrouded in cool temperatures with abundant wildlife, scenic mountain-top vistas, and seven key archaeological sites of the Maya and Olmec cultures.
- Energy: El Salvador is a prime destination for investment in the energy sector, with transparent processes and clear rules that provide stability in rates. This makes it one of the most competitive markets in Central America, with a thriving participation in the regional electricity market (MER) born within the framework of the Electrical Interconnection System of the Countries of Central America (SIEPAC).
What is the economy like in El Salvador?
With its favorable business environment and strategic location, one of the best decisions when entering the Central American market is to start your business in El Salvador. The government has enacted a series of measures aimed at encouraging foreign investment and fostering entrepreneurship, including tax incentives, simplified registration processes and a favorable legal framework. On top of that, it has made great strides in combatting crime.
In addition, El Salvador has 8 trade treaties and 3 agreements with countries as diverse as the United States, Mexico, Taiwan and the European Union, providing access to a vast potential market of over a billion consumers. Whether you are a budding entrepreneur or an established company looking to expand, if you start your business in El Salvador, you will have unparalleled opportunities for growth and success.
El Salvador’s strategic location in Central America also provides easy access to regional markets such as Mexico, Guatemala, Honduras, and Nicaragua. This geographical advantage opens up opportunities for trade and expansion into neighboring countries.
Furthermore, the country boasts a skilled workforce with competitive labor costs. With a growing pool of talented professionals across various industries, businesses can find qualified employees at affordable rates.
Biz Latin Hub can help you start your business in El Salvador
At Biz Latin Hub, we offer a wide range of market entry and administrative support services in Latin America and the Caribbean. We can help you start your business in El Salvador and keep it running in the medium to long term.
Our areas of specialization include outsourcing for hiring and recruitment in El Salvador, accounting and taxation, company formation, and legal counsel for businesses.
Having offices in key cities throughout the region and established partnerships in various other markets, our network of resources allows us to facilitate cross-border operations and market entry in multiple countries.
Contact us today to learn more about our services and how we can help you start your business in El Salvador.
If you found this article on back office services in El Salvador interesting, check out the rest of our coverage of this thriving South American market. Or read about our team and expert authors.
