El Salvador is attempting to entice foreign investment by enacting significant tax cuts on Bitcoin trading.
According to a presidential legal counsel, the government of El Salvador will exempt investors from paying capital gains and income taxes on Bitcoin (BTC). According to Agence France-Presse, Javier Argueta, a legal adviser to President Nayib Bukele, is aiming to entice international investment through significant tax discounts on Bitcoin. Agence France-Presse reported Sept. 10.
“If a person has Bitcoin assets and produces large earnings, there will be no tax. This is clearly done to encourage foreign investment,” Argueta explained, adding that El Salvador will not levy taxes on “either capital increase or income.”
According to Argueta, the Salvadoran government will actively trace Bitcoin transactions on El Salvador’s official BTC wallet, Chivo, in order to counteract possible unlawful cryptocurrency use. “We are implementing a series of international organizations’ recommendations against money laundering,” he stated.
To mitigate the impact of excessive volatility or price changes, the Chivo wallet would also temporarily cease Bitcoin transactions on the application if Bitcoin value fell.
El Salvador became the world’s first country to adopt Bitcoin as legal tender last Tuesday, requiring all local establishments to accept BTC as payment. El Salvador introduced the official BTC wallet known as Chivo in collaboration with worldwide organizations such as Bitso crypto exchange and Silvergate Bank, allowing users to convert BTC transactions into US dollars or withdraw using a special ATM with no transaction fees.
As previously reported, the Chivo wallet was temporarily unavailable for maintenance on the day of its introduction. Several social media posts claim that certain Chivo wallet customers are still having serious problems transacting or withdrawing from Chivo after El Salvador repaired the crypto wallet last week.
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