Foreign investors will not be required to pay taxes on profits from Bitcoin, a government adviser told the AFP this week.
Javier Argueta, legal adviser to President Nayib Bukele, told the news source, “If a person has assets in bitcoin and makes high profits, there will be no tax. This (is done) obviously to encourage foreign investment.”
“There will be no taxes to pay on either the capital increase or the income,” Argueta said.
El Salvador is making the most of its first-mover nation advantage. There are many Bitcoiners around the world looking to move to countries that try to take fewer capital gains taxes. The irony of these taxes is that many states make it extremely difficult to buy Bitcoin in the first place and then expect people to pay capital gains taxes for selling.
El Salvador became the first country to make Bitcoin legal tender on Tuesday. One-fifth of the country’s GDP relies on remittances. The introduction of Bitcoin as legal tender will cut the fees of those remittances down significantly and remove commissions entirely. Bitcoin is a major step toward banking El Salvador’s unbanked as well.
Argueta told the AFP that the Chivo wallet has traceability measures to alleviate popular misunderstandings and outright false narratives that Bitcoin is used primarily for money laundering or anonymous criminal activity.
“We are implementing a series of recommendations from international institutions against money laundering,” the adviser added.
Argueta also added that Bitcoin transactions would be halted temporarily if its value in USD were to collapse, in order to minimize the impact of extreme relative volatility when priced in dollars.
Although El Salvador’s government actually purchased more Bitcoin when the price dropped several thousand dollars on what is being affectionately referred to as Bitcoin Day, making Nayib Bukele the first president to publicly buy a Bitcoin dip.