
The Law for the Promotion of Innovation and Technological Manufacturing, is an important law that was announced via Twitter (now x.com) by President Nayib Bukele in April 2023 and was approved by the Legislative Assembly (the Congress) a few weeks later. More specifically, it was approved in early May 2023. This is a very important law, which we will talk about below.
In this publication, we will primarily explore why the Law for the Promotion of Innovation and Technological Manufacturing is so important for El Salvador, and what types of technology jobs or investments are not taxed due to this law.

To summarize everything, it can be said that this law comprises articles aimed at promoting technological innovation and investment in technology in El Salvador, both in research, manufacturing, and services.
It does so by offering zero taxes to individuals or companies that qualify to take advantage of this law, which can be utilized by each person or company for 15 years. In other words, for 15 years they will not have to pay taxes to the Salvadoran state.
Is 15 years too short? We do not know that. What we do know is that this law can be combined with another (rather, a reform) enacted months later, a law concerning money coming from abroad, but that other reform will not be discussed in this article.

Objective of this Law
Broadly speaking, the goal of this law is to turn El Salvador into a global technological hub. Initially aiming to lead in Latin America but, on a macro level, also on the international stage.
As a curious fact, Nayib Bukele posted the following in a tweet in April 2019:

It’s time to rethink our economy.“
Source: https://x.com/nayibbukele/status/1118985558485868544
At that time (when that tweet was published on what is now x.com), Nayib Bukele had already been elected President of El Salvador in February. He posted the tweet in April and was sworn in as President about two months later, in June 2019.
Even then, with that tweet, we can see that Bukele already foresaw what was happening in the world. Back then, there were some people who understood that we were in the 4th industrial revolution, but it was actually very few people.
That’s why it must be acknowledged that Bukele was perhaps the only politician in El Salvador at that time who could see the bigger picture (or at least foresee what was coming) or that his mentors (if he has or had any) were instructing him very well.
Several years have passed since that tweet, and if you ask people if they realize we’re in the 4th Industrial Revolution, they are unaware, entertained with TV, Netflix, and who knows what other distractions.
Therefore, the Law for the Promotion of Innovation and Technological Manufacturing in El Salvador is key, and as you can see, most people fail to understand just how crucial and important it is, as well as what it aims to achieve.
The Law for the Promotion of Innovation and Technological Manufacturing of El Salvador not only aims to turn El Salvador into a global technology hub but also seeks to ensure that the Salvadoran economy survives the massive wave that will disrupt the economies of many countries. Moreover, it aspires for El Salvador not just to survive but to become a leading country in the Fourth Industrial Revolution.
What is the Fourth Industrial Revolution?
There are several definitions of what the Fourth Industrial Revolution, also known as Industry 4.0, is, but we can describe it as the current technological transformation happening in the world.
This transformation involves the convergence of technologies and developments such as artificial intelligence, data processing, genetic engineering, robotics, cloud computing, and other technologies and innovations.
All these advancements aim to create a world nearly 100% connected. This is where concepts like the Internet of Things (IoT), the Internet of Nano-Things (IoNT), and the Internet of Bodies (IoB) emerge, all intertwined with robotics, artificial intelligence, and other developments.
Below, I am attaching an explanatory video to better understand what the Fourth Industrial Revolution is. The video is in Spanish, but you can activate the English subtitles.
Also, the World Economic Forum created the following video several years ago explaining what the Fourth Industrial Revolution is.
Why does El Salvador need to position itself in advance?
El Salvador’s economy heavily depends on maquilas, that is, clothing and textile production. Another important sector is the service sector, such as customer service centers like call centers.
If these two sectors were to be displaced for any reason, what would happen to El Salvador’s economy? The answer is that there would be tens of thousands of unemployed people.
We don’t have the exact figures, but we can imagine that the number of people employed across all the maquilas and call centers in the country sums up to several tens of thousands. The jobs of these people are increasingly threatened by the Fourth Industrial Revolution.
An Industrial Revolution that no country can stop.
The important detail is that this Fourth Industrial Revolution will increasingly create more unemployment due to artificial intelligence and robotics.
This will gradually happen. Many jobs are already being automated. A simple example is in customer service, where many companies and businesses no longer need as many people to address their customers’ concerns.
Part of customer service is being handled by artificial intelligence, which can answer customers’ questions.
Many people think this is unrealistic, but the reality is that the artificial intelligence we see today (as of the end of May 2024) is not comparable to what AI will be like in the coming years.
In summary, artificial intelligence, automation, and robotics will replace many jobs worldwide.
This is why El Salvador must prepare, and what better way than to invest in technological development.
Rather than betting on an economy heavily based on sectors that will be replaced or completely restructured by artificial intelligence and robotics, it is better to invest in the very sectors that are driving the Fourth Industrial Revolution.
In this context, countries only have two options: either ride the wave or be swept away by it.
An example of a Previous Wave
To give an example: Imagine we go back to 1990, and the internet is just arriving. No one knows or can imagine how the internet will revolutionize the world in the next 30 to 40 years. It will change life and the way we interact, the way we trade, and the way we communicate completely.
And then a country appears (in the 1990s) that does everything possible to create the optimal ecosystem and friendly laws to attract to its territory companies that were unknown at that time, one of them called Amazon, another Google, another Microsoft, Intel, IBM, and others.
In the 1990s, it wasn’t a country that became the preferred location for all those tech companies that are now global giants. Instead, it was a city or area known today as Silicon Valley.
All these companies went on to change the world (and others that were created in the years and decades that followed). Just to give one example, as the internet expanded, people stopped sending letters, and today it is very rare for someone to receive a letter. Instead, they receive an email or a video call.
The number of things that have changed since then is so vast that we prefer not to provide more examples to avoid extending this publication excessively. However, we believe the point is clear: the importance of anticipating what can be seen on the horizon.
And on the horizon, one can see that artificial intelligence, the Internet of Things, DLTs (including blockchains), the Internet of Bodies, and Big Data (which involves massive data processing), among other sectors, will change the world much more than it has changed from the 1990s to today.
Basically, everything will be digitized (or almost everything, even “property deeds,” for example), and everyone will be on the internet.
Law for the Promotion of Innovation and Technological Manufacturing
If you wish to see the complete law in PDF, you can view it here (obviously in Spanish), directly on the Legislative Assembly’s (Congress) website.

Activities that benefit from this law
As can be seen in the image created by the Ministry of Economy of El Salvador, those who benefit from this law are individuals or legal entities engaged in:
- Programming
- Management
- Maintenance
- Software analysis
- Analysis of computer systems
- Consulting
Each individual or company wishing to invest or develop any activity must check if that activity can fit into any of these categories, as you will see, “Management” and “Maintenance” can cover a variety of economic activities.
And regarding the manufacturing of hardware or accessories related to technology, this law applies to individuals or companies engaged in:
- Semiconductors
- Nanotechnology
- Robotics
- Assembly
- Production of technological equipment or hardware
- Manufacturing of parts, materials, and equipment or facilities
- Unmanned aircraft and vehicles (this includes drones)
If all that we’ve mentioned isn’t enough, how about we tell you that, to transform El Salvador into a global technological hub, efforts were also made to make it one of the safest countries in the world?
In fact, given the current situation across the Americas (North America, Central America, and South America), it is not far-fetched (and the numbers confirm it) that El Salvador is one of the countries with the lowest crime rates on the continent.
As of the date of publishing this information, only Canada has a lower crime rate, but the country aims to surpass Canada and become the country with the lowest crime rate on the continent.