No Import Tax on EVs in El Salvador

Here in Guatemala there is way less promotion of EVs than I would like to see. I wondered what our neighbor, El Salvador, was doing. This release from (US) sounded pretty positive.

El Salvador approves 0% customs duty or value added tax (VAT) tax for electric vehicle imports.

On May 20, 2021, the Government of El Salvador published the approved Law No. 738 for electric mobility. The main purpose of this law is the promotion of incentives to import and to use electric and hybrid vehicles in the public and private sector. Under this regulation, a 0% custom duty is established for electric and hybrid vehicles and importers are exempt from paying the 13% Value Added Tax (VAT) on the importation value, as well as the Special Tax on the First Registration of Goods.

Transportation is one of the most important sectors in Central America. The region is promoting sustainable mobility to achieve significant reductions in greenhouse gas (GHG) emissions. The regulations are promoted in compliance with the international commitments acquired to mitigate the effects of climate change increasing the environmental protection.

The Salvadoran Government is working on a strategic plan to improve transportation infrastructure. EV charging infrastructure will be key in the usage of electric vehicles. This will create opportunities for battery charging equipment, services and EV parts and accessories.

U.S. companies involved in electric transportation are encouraged to contact the U.S. Department of Commerce in San Salvador, El Salvador for more information:

My feeling is that this is exactly the right thing to do. I guess I would call it a “soft subsidy” where the government just doesn’t charge you rather than the government paying you (and the manufacturer). It’s a lot less overhead to implement than other schemes.

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