After officially implementing the Bitcoin law, El Salvador is now looking to get the attention of foreign investors. This will reportedly be achieved by exempting foreign investors from any kind of income tax or capital gains related to the flagship crypto asset.
The idea was generated after an announcement made by Javier Argueta, legal advisor to President Nayib Bukele, who stated:
“If a person has assets in Bitcoin and makes high profits, there will be no tax. This is done obviously to encourage foreign investment.”
According to reports, certain terms and conditions need to be met in order to get exempted from the tax. However, the authorities seem quite confident of such an initiative at the moment. Let’s find out more details regarding the possible tax exemption in El Salvador.
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What to Know About Tax Exemptions Planned by El Salvador?
Adopting a digital currency as a legal tender has been a major step for the Central American country. However, numerous considerations come with it as many expect El Salvador to set a precedent for other countries.
One of the attempts for ground-breaking achievement is to make El Salvador crypto-friendly for foreign investors as well. As seen from Argueta’s announcement mentioned above, the tax exemption for Bitcoin trading is an incentive for foreign investments.
According to reports, Argueta also added that there will be no tax imposed by the country on income as well as capital increase. He further explained that the authorities in El Salvador are already aware of how they can prevent illegal BTC trading in the country.
One of the methods to achieve this milestone is to actively trace all BTC transactions on the Chivo wallet.
“We are implementing a series of recommendations from international institutions against money laundering,”
It has also been reported that the Chivo wallet will stop any kind of Bitcoin transactions on the app, in the event of a price drop seen for BTC. This has been planned in order to reduce the impact of price volatility on the country.
Could this Benefit Bitcoin?
Being adopted as a legal tender by a country is a major milestone for the flagship crypto asset. However, it did not contribute to its price surge, as was expected.
Nonetheless, the value of the digital asset remains intact as major companies such as MicroStrategy continue to accumulate it.
Whether the initiations such as the tax exemption for BTC trading make a difference in Bitcoin’s price or not is yet to be seen in real life.
Bitcoin is the most popular cryptocurrency in the world and is currently trading at $45,360 (at the time of writing).
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