On Tuesday last week, El Salvador became the first country to make Bitcoin legal tender. One-fifth of the country’s GDP depends on remittances. The introduction of Bitcoin as legal tender will significantly reduce the cost of these transfers and completely eliminate commissions. Bitcoin is also an important step for the bankless bank in El Salvador.
This week, a government adviser told a news source that foreign investors would not pay taxes on Bitcoin profits.
President Nayib Bukele’s legal advisor said: “There is no tax on the capital increase or income.”
Javier Argueta, President Nayib Bukele’s legal advisor, told news sources, “If a person has assets in bitcoin and makes high profits, there will be no tax. This (is done) obviously to encourage foreign investment.”
“There will be no taxes to pay on either the capital increase or the income,” said Algerta.
El Salvador is taking full advantage of its first-mover. There are many bitcoiners around the world looking to move to countries that are trying to lower capital gains taxes. The irony of these taxes is that many states initially struggle to purchase bitcoins and then expect people to pay capital gains taxes on the sale of bitcoins.
Argueta said that the Chivo wallet has traceability measures in place to mitigate widespread misunderstandings and overt misrepresentation that Bitcoin is primarily used for money laundering or anonymous criminal activity.
The adviser added: “We are implementing a series of recommendations from international institutions against money laundering.”
Argueta added that Bitcoin trading would be temporarily suspended if dollar-denominated value collapses to minimise the impact of extreme relative fluctuations in US dollar values.
Although it is affectionately known as Bitcoin Day, when the price of Bitcoin dropped thousands of dollars, the El Salvador government actually bought more bitcoins, making Naib Buquer the first public purchase of bitcoins to fall from the president.