Due to the COVID-19 pandemic, many countries have been economically affected, whereby have taken certain measures to favor the economic recovery.
El Salvador, in this context, enacted through the Legislative Assembly on July 17, 2020, the Decree N°685, or new Law for the creation of Trusts for Economic Recovery, giving priority to Micro, Small, and Medium Enterprises.
The purpose of this article is to provide information on the main aspects of such a law.
Term of Constitution of the Trust
A term of 12 years is granted as of the effective date of the Law.
Purpose of the Trust
The purpose of the Trusts constituted will be to administer the following programs:
- Subsidy Program for Employees of Micro, Small, and Medium Enterprises registered in the Salvadoran Institute of Social Security or in the National Commission of Micro, Small, and Medium Enterprises.
- Credit Granting Program for companies registered as employers in the Salvadoran Institute of Social Security.
- Productive Financing Program for those entrepreneurs in the informal sector.
Constitution of the Trust
The Trust may be formalized by means of a Public Deed, which must be registered in the Registry of Commerce.
In this grant will appear as the trustor, the State, and the Government of El Salvador, and as trustee the Banco de Desarrollo (Development Bank) of El Salvador or BANDESAL.
About the Trust Assets
The value of the trust (US$600 million) will be distributed as follows:
- US$140,000,000,000 earmarked for the Employment Subsidy Program.
- US$360,000,000 for the Credit Granting Program.
- US$100,000,000,000 for the Productive Financing Program for entrepreneurs in the informal sector.
Likewise, interest from investments or income of the Trust, donations, inheritances and legacies, real estate and personal property, and other contributions received will also be part of the trust.
It should be noted the exemption of the Trust from the payment of Income Tax but must comply with the formal obligations thereof.