El Salvador is attempting to attract foreign investment by significantly reducing the tax on Bitcoin trading.
According to a presidential legal counsel, El Salvador’s government will exempt investors from capital gains and income taxes on Bitcoin (BTC).
As stated by Agence France-Presse, Javier Argueta, a legal adviser to President Nayib Bukele, is seeking to encourage foreign investment through significant tax breaks on Bitcoin.
“If a person has assets in Bitcoin and makes high profits, there will be no tax. This is done obviously to encourage foreign investment,”Argueta explained, adding that El Salvador will not tax “either capital growth or income.”
Argueta reportedly stated that the Salvadoran government would actively monitor Bitcoin transactions on El Salvador’s official Bitcoin wallet, Chivo, in order to combat potentially illegal cryptocurrency use.
“We are implementing a series of anti-money laundering recommendations from international institutions,” he explained.
Additionally, if the value of Bitcoin collapsed, the Chivo wallet would temporarily halt Bitcoin transactions on the application to mitigate the impact of extreme volatility or price fluctuations.
El Salvador became the world’s first country to adopt Bitcoin as legal tender on Tuesday, requiring all local merchants to accept BTC as payment.
El Salvador, in collaboration with global companies such as Bitso cryptocurrency exchange and Silvergate Bank, launched the official Bitcoin wallet Chivo.
This enables users to convert BTC transactions into US dollars or withdraw using a special ATM without incurring transaction fees.
As previously reported, the Chivo wallet was temporarily unavailable on launch day for maintenance.
According to multiple social media reports, some Chivo wallet users are reportedly still experiencing significant difficulties transacting or withdrawing from the crypto wallet following El Salvador’s fix last week.