Manufacturing of processing and networking devices, as well as software development, programming, app creation, and AI research and development, will no longer be taxable in El Salvador.
As the first nation to recognize Bitcoin as a legal currency, El Salvador has boldly abolished all taxation on technological advancements. This development coincides with El Salvador’s plans to open what will be called the “Bitcoin office,” or the National Bitcoin Office.
To combat volatility and reliance on the U.S. currency, Salvadoran President Nayib Bukele legitimized Bitcoin on September 7, 2021. Over the past 18 months, El Salvador has rethought its Bitcoin investment strategy and put the proceeds towards the country’s reconstruction on multiple occasions.
Bukele, an advocate of the strategy’s continuation, thought reducing revenue requirements to speed up technological growth was a good idea. On April 1st, Bukele delivered on his pledge to Congress by submitting legislation that would do away with all income, property, and capital gains taxation on technological advances “such as software programming, coding, app and AI development, and computing and communications hardware manufacturing.”
The Bitcoin office, a governing agency for collaborating on projects with Bitcoin innovators and businesses, has been set up to help with this effort. The mission of ONBTC is to “position the country in the world as a technological and economic power,” as stated by the Bitcoin Association of El Salvador.
Bukele’s continuing efforts to remake El Salvador include boosting tourism, combating terrorists, and establishing regional business centers.
El Salvador’s legal structure for Bitcoin-backed bonds, Volcano Bonds, was established at the beginning of 2023, thanks to the new law.
Bitcoin City will be a sustainable crypto-mining center fueled by hydrothermal power from the nearby Conchagua volcano, so the Volcano Bonds name comes from that.
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