El Salvador’s Ministry of Economy has reportedly presented a draft bill to the Legislative Assembly, proposing new tax incentives for fintech and digital financial service companies.
The bill, titled “Law for the Promotion of Fintech Entities and Regulation of Digital Financial Services”, aims to oversee El Salvadoran and foreign legal entities operating in El Salvador that offer digital financial products or services using financial technologies.
The bill proposes a five-year income tax exemption for the earnings, revenues, or profits generated by Fintech entities authorized by the Superintendency of Financial Systems and digital payment platforms approved by the Central Bank. This exemption will apply to Fintech entities incorporated upon the new law’s enactment.
The bill recognises and regulates key segments of the digital financial ecosystem, identifying the entities that develop them as Fintech entities, thereby classifying them as regulated members of the financial system.
These segments include:
- Payments via digital platforms;
- Digital platforms for alternative financing or crowdfunding;
- Loans facilitated through digital platforms.
The bill also outlines the requirements for incorporating and initiating operations of Fintech entities. Depending on the activity involved, authorisation will be granted by either the Superintendence of the Financial System or the Central Bank.
