Key Benefits:
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________________________
1
DECREE NO 905
THE LEGISLATIVE ASSEMBLY OF THE REPUBLIC OF EL SALVADOR,
CONSIDERING:
I.-That Article 101 of the Constitution establishes that the State shall promote Economic and Social Development by increasing production, productivity and the rational utilization of resources and that purpose, will promote the various sectors of production.
II.-That Article 102 of our Carta Magna stipulates that the state will promote and protect private initiative within the conditions necessary to increase national wealth and to ensure the benefits of the country's greatest number of inhabitants.
III. The Government of the Republic has as one of its primary objectives, the promotion of private investment initiatives as a potential trigger, in order to encourage the generation of jobs and income, and to strengthen the creation of wealth in the national territory.
IV.-That it is necessary to dictate rules that guarantee security In order to maintain those conditions that are decisive for its initiative and to generate sustainable economic growth, establishing mechanisms that encourage, facilitate and encourage the growth of the investments in our country.
BY TANTO,
in use of its Constitutional powers and on the initiative of the President of the Republic, through the Ministers of Finance, and Economy respectively.
DECRETA the following:
LEGAL STABILITY LAW FOR INVESTMENTS
CHAPTER I
PROVISIONS GENERALS
OBJECT AND PURPOSE
Art. 1.-The purpose of this Law is to attract and promote National and Foreign Investment through a legal framework that guarantees Legal Security to the Investor, through the implementation of Legal Stability Contracts, with the the objective of contributing effectively to the economic and social development of the country; to the growth of the strategic sectors; to the efficient integration of the national economy with the international economy and to the generation of employment.
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________________________
2
APPLICATION SCOPE
Art. 2.-They shall be subject to the application of this Law, natural and legal persons, national or foreign, who undertake new investment projects or expand existing ones within the national territory, which contribute to the strengthening of the country's productive forces and generate added value to develop the following sectors considered strategic and necessary for the growth of the country's economy: aeronautics, agro-industry, aquaculture, electronics, energy, strategic infrastructure, logistics, health services, business services to distance, tourism, telecommunications, diverse manufacturing, science and technology.
New sectors may be incorporated that meet the requirements, form and parameters set out in this Law and its Regulation, which must be based on technical analysis to be developed by PROESA, in coordination with the specialized entities, who will be obliged to collaborate in the elaboration of the aforementioned technical analyses.
DEFINITIONS
Art. 3.-For the purposes of this Law:
a) MINEC: Ministry of Economy;
b) PROESA: The Promoter Agency for Exports and Investments of El Salvador;
c) Contract: Contract of Legal Stability;
d) National Treatment: It consists of securing the same treatment for foreign investments and domestic investments, without exceptions other than those indicated by the current laws;
e) Freedom to make investments: Anyone natural or foreign legal or foreign legal entities may make investments of any kind in the Salvador, except those limited by the Law;
f) Stability: Certainty in the maintenance of legal conditions contracted with the investor;
g) Temporality: Legal Stability Contracts must be
h) Transparency: The procedures for the assessment and approval of the Legal Stability Contracts carried out by the competent authorities shall ensure the publicity of the acts and an appropriate accountability;
i) Promotion of investment: Legal Stability Contracts seek to promote domestic and foreign investment, within the national territory, for economic and social development;
j) Institutional Efficiency: Celerity by the competent authorities in the
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________________________
3
procedures, procuring the least possible cost to investors; and,
k) Good faith: Relations between the State and the investor should be governed by honesty, trust and mutual respect.
CHAPTER II
RESPONSIBLE FOR
PROESA
Art. 4.-In the framework of this Law, PROESA shall have the following powers:
a) Elaborate and provide interested investors, the format of application to benefit from the guarantees laid down in this Law;
b) To verify compliance with the requirements set forth in Art. 7 of this Law at the time of receipt of the request from the interested investor, and to resolve by reasoned resolution, approval or refusal thereof;
c) Require enlightened reporting and opinion of any public institution when required by the nature of the investment and the work to be developed;
d) To process the request for review of the decision rejecting the application;
e) To issue an opinion of the change of ownership of the investment when required by the MINEC;
f) Define the new sectors that will be subject to application of this Law; and,
g) The others determined in this Law.
MINISTRY OF ECONOMY
Art. 5.-In the framework of this Law, the MINEC shall have the following powers:
a) Signature of the Legal Stability Contracts, after favorable resolution of PROESA;
b) Administration, verification and monitoring of the obligations and conditions set out in the Contract;
c) Request information from the investor of the fulfilment of the obligations laid down in Article 16 of this Law;
d) Having access to the facilities or projects and others that are establish in the Contract;
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________________________
4
e) Carry a record, which shall be of public character, of the Legal Stability Contracts to subscribe in application of this Law; and,
f) The others set forth in this Act.
CHAPTER III
PROCEDURES FOR CONCLUDING CONTRACTS
OF THE GUARANTEES
Art. 6.-From the subscription of the Contract, the undersigned investors shall enjoy the following guarantees:
a) Financial stability in the national sphere, which is derived from the legal regime of the current taxes;
b) Tax stability in the municipal area, which is derived from the legal regime of the municipal taxes in force;
c) Stability in the tax exemptions contained in Special Laws, for the period that would have been granted by the Relevant institution;
d) Stability of customs regimes, arising from the Laws Special duties related to the return of duties, suspension and release;
e) Stability of free transfer to the outside of funds from foreign investments, in accordance with the Investment Law; and,
f) Stability of the immigration regime related to the residence of an investor, as established in the Investment Law and other current legislation.
All the guarantees described in this article will be subject to compliance with Article 16 of this Law.
Except for the present stability regime
During the term of duration of the Legal Stability Contracts, such stability will not be able to fall on the rules declared unconstitutional by the Constitutional Court of the Court of Justice of the Court of Justice. Supreme of Justice.
ENFORCEABLE INFORMATION AND DOCUMENTATION
Art. 7.-To benefit from the guarantees provided in this Law, any investor must
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________
5
to submit to PROESA an application in the form of the format prepared by that institution, which shall contain The following information and documents:
a) General data of the natural or legal investor as well as its legal or proxy representative, including certified copies by notary; of the writing of the constitution and its changes, if any; current credentials of your legal representative or the In the case of acting by proxy, it shall also be accompanied by copies certified by notary, the Single Identity Document (DUI) or Passport and the Tax Identification Number (NIT) of the legal or proxy representative, according to the case and certification of the copy of the VAT card;
b) Description of the activity that the investor will develop, accompanied by his respective investment plan, which must contain among others:
i. Item and amount of the investment, in accordance with the deadline set forth in Article 14 of this Act;
ii. Number and type of jobs to be generated; iii. The commitment to the formation of a human resource to be hired; iv. The technological transfer that will be given during the execution of the activities; v. An estimate of the economic added value; vi. The social benefits that the activity will generate; vii. The reasons that justify the stability of any investment, in the cases of
extension; and, viii. In general, the manner in which the objectives of this Law will be fulfilled.
c) Indication of the legal regime whose stability is requested, as provided for in Art. 6 of this Law;
d) Origin of the resources with which make the investment, by means of an affidavit or any other means of proof of those referred to in our legislation; and,
e) Solvences tr ibutaria, municipal, customs, social security and pension of the institutions corresponding. Such a requirement will not take place in the case of natural or legal persons not domiciled in the country.
In cases where the documentation to be presented comes from a country with a language other than Spanish, it must bring the respective Translation proceedings, according to art. 24 of the Law of the Notary Exercise of the Voluntary Jurisdiction and Other Diligences. If the documentation submitted has been duly translated into Spanish from abroad and with their respective legalizations, these steps will not be required. Any documentation from abroad must come with their corresponding authentic or apostille, as the case may be.
EVALUATION CRITERIA
Art. 8.-PROESA, to approve or deny the request, you must evaluate the following:
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________________________
6
a) That the application complies with the requirements set out in Article 7 of this Law;
b) That the investments correspond to the sectors established in accordance with Article 2 of this Law;
c) That the objectives and eligibility criteria set forth in this Law be met, as the case may be; and,
d) the cases of enlargement of an existing investment, which the projected effects on development economic and social of the country are clearly superior and justify the coverage of the investments made previously.
PROCESS OF PROCESSING OF THE APPLICATION
Art. 9.-Received the request referred to in the previous article; PROESA will verify if it complies with all the requirements set out in this Law to continue the process and to resolve the contract application, for which it will have a maximum period of time of 25 working days, counted from the filing of the application, to approve or deny it by reasoned resolution.
INTERINSTITUTIONAL COOPERATION
Art. 10.-If PROESA considers it necessary to extend or verify the information submitted by the investor in the related application, it may require a report or an illustrated opinion of any public institution related to the subject matter of the project and in the limits of its powers, being obliged to provide it within the maximum period of 15 working days, counted from the date of its request, period that will be understood within the established in Art. 9 of this Law.
Due to the time limit referred to in the preceding paragraph, without having received any response by part of the institution to which you have been asked to report or opinion, it will be considered as favorable and will continue with the procedure.
PREVENTION
Art. 11.-If the application referred to in this provision does not satisfy the required legal requirements, PROESA shall, by reasoned resolution, prevent the applicant from submitting the lack of documentation within 15 working days. or information found in the submitted application. This period shall be counted from the day following its notification and may be extended for the same period at the request of the person concerned and with justified cause.
The period referred to in the preceding paragraph or the prevention of prevention shall be expired. PROESA will continue with the processing of the relevant application. The time limit for the prevention of prevention shall suspend the maximum period referred to in Article 9 of this Law. If the data subject does not subsate within the time limit set out in the resolution, the resolution shall be refused and filed.
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________________________
7
In case the applicant continues to be interested in carrying out his/her project, he/she must present a new request.
REVIEW RESOURCE
Art. 12.-The decision of refusal shall admit review proceedings before PROESA, which shall be brought by the person concerned within a period not exceeding 10 working days after the notification. Notwithstanding the above, the resolution indicated will not result in compensation claim action.
CHAPTER IV
LEGAL STABILITY CONTRACT
SUBSCRIPTION
Art. 13.-Approved the application referred to, PROESA shall transmit to the Ministry of Economy the relevant documentation, within a maximum period of ten working days from the issuance of the resolution, for the preparation of the respective contract, for which the investor must sign a Legal Stability Contract, hereinafter "the Contract", with the purpose of accessing the guarantees of stability contained in this Law, within a period not greater than 15 working days from the referral of the favourable resolution issued by PROESA. Such Agreement shall be granted by public deed and shall contain at least the following:
a) Certification of the resolution issued by PROESA, by which the application referred to in Article 9 of this Law is approved;
b) The reference of the legal provisions of the different Laws on which stability is ensured;
c) The amount and destination of the investment;
d) The obligations assumed by investors under the approaches contained in the investment plans referred to in Article 7 (b) of this Law;
e) commitment to earmark three percent (3%) of the total value of the investment entered in the Contract, for the execution of local development works in the Municipality where the investment will be established, which should be used during the first two years counted from the start of project operations. Similarly, the contract must be defined in the manner in which such works will be selected and executed, in coordination with the corresponding Municipal Mayor and the Social Investment Fund for Local Development (FISDL);
f) Contract termination causes;
g) The deadline for execution; and,
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________
8
h) Contract Vigency.
Additional clauses may be agreed by the parties on the basis of the nature of the investment, provided that they do not contradict this Law, its principles and the legal order in force. In no case may the granting of more guarantees than those provided for in Article 6 of this Law be stipulated.
If any of the conditions mentioned above are omitted, the Contract shall be null.
Contract, the investor will have the term of two years to initiate the execution of the investment in the agreed terms, extendable for a term equal, for once, at the request of the investor, presenting the justifications for the extension; period within which you will be required to comply with all requirements that are required to operate legally. In the course of that period, it is understood that the Legal Stability Contract will be in place.
In cases of expansion of an existing investment, the subscription of the Legal Stability Contract will involve coverage for all the investment of the productive unit already established, not the one of other investments made by the subscriber investor, in other turns or economic areas.
Once the Contract between the parties has been signed, the Ministry of Economy will send it to the Ministry of Finance and other institutions involved, within a maximum of 15 working days.
AMOUNT OF INVESTMENT TO BE DEVELOPED AND TERM OF CONTRACT
Art. 14.-National or foreign investors, in order to obtain the guarantees granted by the Legal Stability Contract under the framework of this Law, must make an investment in fixed assets for an amount equal to or greater than four thousand two hundred and twenty (4,220) current minimum wages in the industry sector, in dollars of the United States of America, in new projects or in the expansion of existing ones.
The term of the Contract will be directly related to the amount of the investment, of the following way:
a) Fixed asset investments for an equivalent amount of between 4,220 and 21,100 minimum wages in force in the industry sector, may have a contract with a maximum period of up to five (5) years. The investment must be executed in full for the first two years, counted from the start of the works;
b) Investments in fixed assets to an equivalent amount of 21,101 and 42,200 minimum wages in force in the industry sector, may have a contract with a maximum period of up to ten (10) years. The investment must be executed in full during the first five years, counted from the start of the works; and,
c) Investments in fixed assets for an equivalent amount exceeding the 42,200 minimum wages in force in the sector industry, may have a contract with a maximum period of up to twenty (20) years. The investment must be fully implemented during the first ten years, counted from the start of the works.
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________________________
9
The Agreement shall enter into force on the basis of its subscription by the parties, however the deadline of the The same shall apply from the date on which the investment is commenced.
Once a Legal Stability Contract has been concluded, a natural or legal person shall not be entitled to enter into another Contract of the same nature as subsequent investments, before the end of the period of the first.
CONTRACT MODIFICATIONS
Art. 15. In case of approval of reforms to the national or municipal legal regime guaranteed during the term of the contract, the investor may ask the Ministry of Economy to follow suit, when he considers such reforms to be
Ministry of Economy willto decide on the request, within a maximum period of ten working days after the presentation of the document. request. The resolution of approval of the application shall state the reforms to the national or municipal legal regime that will be incorporated into the Agreement, and must be signed within a maximum of fifteen working days.
In case of no In the case of such an addendum within the prescribed period, it shall be understood that such changes shall be applicable to the Contract from the date of expiry of that term, provided that the investor has submitted all the required documentation.
CHAPTER V
INVESTOR OBLIGATIONS
OBLIGATIONS
Art. 16.-Any investor who is a signatory of a Legal Stability Contract shall comply with the following obligations:
a) Those established in the Agreement during the period stipulated and in accordance with the Investment Plan referred to in the literal Article 7;
b) Register the investment in the National Investment Office of the Ministry of Economy;
c) Find solvent with the Ministry of Finance and with the corresponding Municipality in the payment of taxes respective;
d) Find solvent in payment with the Salvadoran Social Security Institute and with the different Pension Fund Administrators, the contributions and deductions made to their employees, corresponding to the previous month before;
e) Send to the Ministry of Economy, 31 January and 31 July each year, reports
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________
10
half-yearly that reflect the fulfillment of the commitments acquired and established in the Contract;
f) Comply with the provisions of Article 5 (d) of this Law;
g) Meet the operating permits and authorizations corresponding to the type of productive activity to be performed, within the time limit set for the start of the investment referred to in Art. 13 of this Law; and,
h) Comply with the the guarantee scheme established in Art. 6 of this Law; the infringement of this regime will result, after analysis by PROESA, to request the termination of the Legal Stability Contract governed by this Law.
CHAPTER VI
FINAL PROVISIONS
CONTRACT EARLY TERMINATION
Art. 17.-The Legal Stability Contract will be terminated for the following reasons:
a) By resignation of the investor, communicated in writing to the Ministry of Economy;
b) For non-compliance by the investor, any of the obligations referred to in Article 16 of this Law;
c) For non-compliance at the beginning of the execution of the investment, within the time limit set out in Article 13 of this Law or for its lack of registration with the National Investment Office of the Ministry of Economy, with the exception of force majeure or fortuitous; as well as for the withdrawal of all or part of the investment, in such a way as to bring it below the amount set out in Article 14 of this Law, as the case may be; and,
d) To see the investor, instrumentalized for the commission or cover up of the crimes established in the Regulatory Law of the Drug Relating Activities and in the Law Against the Laundering of Money and Assets; as well as of the Crimes relating to the Public Finance, to Public Health and Nature and the Environment, regulated in the Criminal Code, provided that there is a judicial judgment a firm and definitive conviction, for which the competent Judge or the Office of the Prosecutor General of the Republic must inform the Ministry of Economy and PROESA.
In the cases of literals (b), (c) and (d) the termination of the contract shall proceed after the investor's failure to comply, by means of a procedure, in which the Ministry of Economy shall give an audience for the term of ten working days to the administered; evacuated this, reasoned resolution shall be issued within twenty-five working days, which shall be notified to the investor. There will be no resource for that resolution.
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________
11
If the existence of the non-compliance is found, the Minister of Economy will declare the termination Contract anticipated, resulting in the loss of warranties granted from such termination.
OF THE ENTITLEMENT
Art. 18. Any change in the ownership of the investment that gives rise to the Contract must be approved by the Ministry of Economy, after a favourable opinion of PROESA.
The MINEC will grant or deny that a holder enjoys the guarantees stipulated in the Contract, with the rights and obligations corresponding to the amount of the initial investment.
DISPUTE resolution
Art. 19.-Within the terms of the Legal Stability Contract, the parties shall establish the mechanism on the basis of which disputes arising in their application, execution or interpretation of this Law or of the Law of the Contract itself, within the framework of Art. 15 of the Investment Law.
EXCEPTION REGIME
Art. 20.-Not included in this Law, investments in metallic or financial mining.
SPECIAL CHARACTER
Art. 21.-The provisions of this Law, for their special character, will deprive them of any other provisions that would be contrary to them.
VALIDITY
Art. 22.-This Decree will enter into force eight days after its publication in the Official Journal.
GIVEN IN THE BLUE HALL OF THE LEGISLATIVE PALACE: San Salvador, at the eighteen days of December of the two thousand fourteen.
OTHON SIGFRIDO REYES MORALES, PRESIDENT.
ENRIQUE ALBERTO LUIS VALDEZ SOTO, GUILLERMO ANTONIO GALLEGOS NAVARRETE, FIRST VICE PRESIDENT. SECOND VICE-PRESIDENT.
___________________________________________________________________ LEGISLATIVE INDEX
LEGISLATIVE ASSEMBLY-REPUBLIC OF EL SALVADOR ____________________________________________________________________
12
JOSÉ FRANCISCO MERINO LÓPEZ, LORENA GUADALUPE PEÑA MENDOZA, THIRD VICE PRESIDENT. FOURTH VICE-PRESIDENT.
CARLOS ARMANDO REYES RAMOS, FIFTH VICE PRESIDENT.
GUILLERMO FRANCISCO MATA BENNETT, MANUEL VICENTE MENJÍVAR ESQUIVEL, FIRST SECRETARY. SECOND SECRETARY.
SANDRA MARLENE SALGADO GARCÍA, JOSÉ RAFAEL MACHUCA ZELAYA, THIRD SECRETARY. FOURTH SECRETARY.
IRMA LOURDES PALACIOS VÁSQUEZ, ERNESTO ANTONIO ANGULO MILLA, FIFTH SECRETARY. SIXTH SECRETARY.
FRANCISCO JOSE ZABLAH SAFIE, JOSE SERAFIN ORANTES RODRIGUEZ, SEVENTH SECRETARY. EIGHTH SECRETARY.
CASA PRESIDENTIAL: San Salvador, 12 days of the month of January of the year two thousand fifteen.
PUBESQUIESE,
Salvador Sánchez Cerén, President of the Republic.
Juan Ramón Carlos Enrique Cáceres Chávez, Minister of Finance.
Tharsis Salomon López Guzmán, Minister of Economy.
D. O. No. 10 Took Nº 406 Date: January 16, 2015
JQ/geg 11-02-2015
___________________________________________________________________ LEGISLATIVE INDEX
