El Salvador’s president is preparing a law to eliminate taxes on AI and technological advancements

El Salvador’s president, Nayib Bukele, wants to introduce a measure to the country’s Congress the next week that would eliminate all taxes on technological innovation, the development of artificial intelligence (AI), computers, and communications gear production.

Bukele announced his plans in a tweet on March 24. He said the tax exemption would encompass income, property, capital gains, and import duties on technological advances such as coding, software programming, AI development, and computer and communications gear manufacturing. He said:

“I will send a bill to Congress next week to eliminate all taxes (income, property, capital gains, and import tariffs) on technological innovations such as software programming, coding, app development, and AI research; as well as computing and communications hardware manufacturing.”

The measure aims to encourage the expansion of El Salvador’s technology industry and attract more international investment in the area.

This program is part of some attempts by the Bukele government to modernize the economy and lessen the country’s dependence on traditional sectors such as agriculture and manufacturing. The government has invested in infrastructure, education, and entrepreneurial programs to stimulate innovation and digitalization in various industries.

If the measure is passed, El Salvador might become desirable for internet corporations and startups seeking to establish a foothold in Central America.

Despite the difficulty of previous years, Bukele strives to build El Salvador as a center for cryptocurrencies. In 2021, El Salvador became the first government in Central America to recognize bitcoin as legal cash, making it more straightforward for Salvadorans living abroad to transfer money home and lowering dependency on the U.S. dollar.

Notably, the International Monetary Fund (IMF) criticized the action as it doubted the sustainability of El Salvador’s acceptance of Bitcoin. As previously reported by Finbold, the leading financial agency, acknowledged in February 2023 that the concerns associated with El Salvador’s adoption of Bitcoin “have not materialised.”

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