El Salvador Encourages Tax-Free Foreign Investment Into Bitcoin
Whereas cryptofans slammed whale investors for dropping the ball on the Bitcoin price last week, on the day that El Salvador became the first country to adopt the digital currency as legal tender, the country has since moved on.
Eager to attract foreign investors to one of the poorest countries in Middle America, President Nayib Bukele has now decided that any foreign investor who makes a profit on Bitcoin while investing in his country, will be exempt from paying any tax.
Javier Argueta, legal advisor to the president, detailed the new regulation, saying:
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.
Although El Salvador is being criticized by many for adopting such a volatile asset as currency, it is making the most out of its position as world experiment. Many other South and Middle American nations might be tempted to follow its example if this move become a success.
To spur investment following adoption bitcoin as legal tender, El Salvador will exempt foreigners from tax on gains from bitcoin investments.— CoinDesk (@CoinDesk) September 13, 2021
By @JamieCrawleyCD https://t.co/yAGOc9Eq5f pic.twitter.com/KEaL0RxSGI
The biggest foreseeable advantage is that millions of dollars of commissions will be shaved of the remittances sent home by El Salvadorian expats to their families. In President Bukele’s nation, these remittances count for no less than 20% of GDP.
If the plan is successful and most remittances sent back home would be converted into Bitcoin, companies like Western Union and other money transfer services stand to lose a large part of their livelihood.
El Salvador's new bitcoin wallet allows for cross-border, virtually instantaneous, zero-fee transactions -- a game changer for a country where 70% of the population depends on money sent home from abroad to get by. @KenzieSigalos has more. https://t.co/wiIAMN9sdW pic.twitter.com/hXVdIEW7aO— CNBC (@CNBC) September 9, 2021
As CNBC said over the weekend, the move could be:
A game changer for a country where 70% of the population depends on money sent home from abroad to get by.
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