Foreign investors will be exempt from tax on their bitcoin profits in El Salvador, according to a legal adviser for the government.
The government of El Salvador has said that foreign investors will be exempt from taxes on bitcoin profits. A government adviser disclosed the information on Sept 10, which is a development that further incentivizes entrepreneurs and investors to enter the nation.
Speaking to AFP, Javier Argueta, legal adviser to President Nayib Bukele, said,
“If a person has assets in Bitcoin and makes high profits, there will be no tax. This (is done) obviously to encourage foreign investment.”
Argueta also said that the country was working with international agencies to implement compliance measures. Global bodies like the International Monetary Fund (IMF) have highlighted traceability and the prevention of illicit financial activities as key worries.
The ratifying of bitcoin as legal tender, though still in its early days, is proving to be somewhat problematic for the country. There has been criticism from all sides, from the opposition party to global bodies across the world. But the government has not trudged on, undeterred by this resistance.
The Chivo Wallet, which is El Salvador’s official bitcoin wallet, was launched on Sept 7, with $30 in BTC offered for first-time users. The government bought 400 bitcoins to prepare for the change, which has to be said isn’t going perfectly.
It remains to be seen how the change will proceed in the medium and long term. Critics have listed a number of issues, with volatility being the number one concern. The country’s internal ministers have drawn attention to this, saying that salary payments could be affected by the volatility.
El Salvador bitcoin adoption filled with ups and downs
The general consensus is that the El Salvador decision is one that has been a rollercoaster ride for the country. This is a first-of-a-kind move for bitcoin, and many are curious to see how it will play out on such a large scale. The upcoming 12 months will be instrumental in seeing how bitcoin plays a role in the local economy.
Those inside the cryptocurrency world have offered their own take on the matter. Charles Hoskinson, CEO of Input Output Hong Kong (IOHK), said that every country needs a bitcoin strategy. He praised El Salvador’s decision, and went so far as to say that there is “nothing in human history that has grown that quickly.”
But of more concern is the fact that citizens are taking to the streets to protest the move. The wallet appears to be working as intended, though there have been some hiccups with ATMs. One citizen group has also filed a lawsuit against the government, which is the most severe move yet.