The central American country, El Salvador, has unveiled new plans to exempt foreign investors from paying taxes on their bitcoin profits.
This was revealed through Javier Argueta, the legal advisor to President Nayib Bukele. This move, which comes barely a week after the country formally announced its adoption of Bitcoin as a legal tender, is obviously to encourage foreign investment.
While speaking with AFP, Argueta said, “If a person has assets in bitcoin and makes high profits, there will be no tax. There will be no taxes to pay on either the capital increase or the income.”
El Salvador is one of the few countries to have formally adopted cryptocurrencies and the first country to embrace the digital currency as its legal tender.
The government, looking to make the most of its groundbreaking fiscal exercise, believes there are many Bitcoiners around the world who are looking to move to countries that require fewer capital gain taxes, which is what it is offering.
The country’s announcement of bitcoin as legal tender is also an attempt at banking the unbanked. About one-fifth of the country’s GDP comes from remittances and the government believes that the introduction of bitcoin as a legal tender will significantly cut down the fees from those remittances and remove commissions entirely.
The country’s formal adoption of bitcoin has sparked varying debates about a potential rise in digital crime especially fraud and money laundering. But the President has assured that it will be actively monitoring and tracing bitcoin transactions in its official wallet, Chivo.
“We are implementing a series of recommendations from international institutions against money laundering”Javier Argueta
Argueta also reports that the country plans to halt bitcoin transactions temporarily if its value in USD were to collapse. This intention is to minimize the impact of the extreme relative volatility of the coin.
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!