In an attempt to lure foreign investments, the government of El Salvador has reportedly exempted foreign investors from paying a capital gains tax and income tax on Bitcoin (BTC).
El Salvador will reportedly exempt foreign investors from paying taxes on their Bitcoin (BTC) gains, a government advisor said AFP news on Friday.
“If a person has assets in bitcoin and makes high profits, there will be no tax. This is obviously to encourage foreign investment. There will be no taxes to pay on either the capital increase or the income,” said Javier Argueta, legal adviser to President Nayib Bukele.
Argueta also said that the government would be actively tracing Bitcoin transactions on El Salvador’s official Chivo Bitcoin Wallet as a measure against the potentially illegal use of the leading cryptocurrency, saying “We are implementing a series of recommendations from international institutions against money laundering.”
Interestingly, Chivo wallet will temporarily halt Bitcoin transactions to lessen the impact of the extreme price volatility and fluctuations. At the same time, it’s not compulsory to use Chivo as citizens are free to use any Bitcoin wallet of their choice.
On Sept. 7, El Salvador officially introduced Bitcoin (BTC) as a legal tender becoming the first country in the world to do so. The same day, President Nayib Bukele announced the purchase of 150 Bitcoin, adding that the country now holds a total of 550 BTC.
In a collaborative effort with Bitso crypto exchange and Silvergate Bank, El Salvador launched the official Chivo BTC wallet that allows users to convert Bitcoin (BTC) transactions into USD or withdraw without incurring transaction fees using a special ATM.
Chivo has already garnered support from financial institutions in El Salvador, as Bancoagricola, the country’s largest lender has joined forces with Flexa, a U.S-based crypto payments facilitator to enable bitcoin transactions for its clients.
However, on the day of the launch, Chivo was temporarily taken down following users experiencing major issues with transacting or withdrawing from even after El Salvador fixing the crypto wallet last week.