El Salvador excludes foreign investors from paying taxes on gains made from bitcoin speculation in the country.
Encouraging Foreign Investments
“If a person has assets in bitcoin and makes high profits, there will be no tax. This is obviously to encourage foreign investment,” told Javier Argueta to AFP, legal adviser to President Nayib Bukele.
He further added, “There will be no taxes to pay on either the capital increase or the income.”
El Salvador made bitcoin legal money alongside the dollar, the country’s official currency, for the past 20 years.
Apprehensions Regarding Crypto
Experts and policymakers in El Salvador express concerns regarding the cryptocurrency’s infamous volatility. Additionally, its possible influence on price inflation in a country with significant poverty and unemployment. Moreover, the absence of user security.
There are also concerns about its potential for illegal usage. Particularly in laundering funds from criminal operations such as drug trafficking and terrorism funding.
El Salvador Prepares Countermeasures
According to Argueta, the cyber “wallet” that allows Salvadorans to purchase and spend bitcoin from home and abroad contains “relevant mechanisms” to assure traceability.
“We are implementing a series of recommendations from international institutions against money laundering,” the adviser stated.
To reduce the consequences of severe currency volatility, he stated that bitcoin transactions would be momentarily suspended if their value fell.
The government claims that the trial would offer many citizens of El Salvador for the first time access to banking services and that it will save millions of dollars in charges on remittances sent home from abroad, primarily the United States.
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