El Salvador will allegedly exempt investors from paying a capital gains tax and an income tax on Bitcoin (BTC), based on a presidential legal counsel. One legal adviser to President Nayib Bukele, Javier Argueta, aims to encourage foreign investment via major tax breaks on BTC, according to an Agence France-Presse report.
“If a person has assets in Bitcoin and makes high profits, there will be no tax. This is done obviously to encourage foreign investment.”
He also said that the country will impose no taxes on any capital increase in Bitcoin or the income and profits acquired from the crypto investment.
Argueta allegedly noted that the government would be actively and continuously tracking BTC transactions on Chivo, El Salvador’s official BTC wallet. The authorities will do the tracing to fight the possibly illegal use of the crypto in the country. He added:
“We are implementing a series of recommendations from international institutions against money laundering.”
El Salvador seeks to attract foreign investment by adopting massive tax breaks on BTC trading. The Chivo wallet would also suspend BTC transactions on the application in case the price of bitcoin collapsed to minimize the impact of massive volatility or price fluctuations.
On September 7, El Salvador became the first nation globally to adopt Bitcoin as legal tender. All local merchants are needed to accept bitcoin as a means of payment for goods and services.
El Salvador cooperated with global firms like Silvergate Bank and Bitso crypto exchange to launch the official Bitcoin wallet that is known as Chivo. The wallet enables users to change bitcoin transactions into the US dollar or withdraw using a special ATM, without being charged any transaction fees.
According to previous reports, the Chivo wallet was taken down for maintenance on the launch day. Several social media reports say that some of the Chivo wallet users are still experiencing major issues with transacting and withdrawing from Chivo after El Salvador fixed the cryptocurrency wallet in the past week.