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The government of El Salvador would exempt investors from paying capital gains tax and income tax on Bitcoin (BTC), according to a presidential legal adviser.
Javier Argueta, legal adviser to President Nayib Bukele, is seeking to encourage foreign investment with significant tax breaks on Bitcoin, Agence France-Presse reported on September 10.
“If a person owns Bitcoin assets and makes high profits, there will be no tax. This is obviously done to encourage foreign investment, ”said Argueta, adding that El Salvador will not impose any tax on“ neither the increase in capital nor the income ”.
Argueta reportedly noted that the Salvadoran government would actively track Bitcoin transactions on El Salvador’s official BTC wallet, Chivo, to combat the potentially illegal use of the cryptocurrency. “We are implementing a series of recommendations from international institutions against money laundering,” he said.
The Chivo wallet would also temporarily halt Bitcoin transactions on the app if the Bitcoin value collapsed in order to minimize the impact of extreme volatility or price fluctuations.
Related: El Salvador’s Largest Bank Partners With Flexa For Bitcoin Payments
Last Tuesday, El Salvador became the first country in the world to adopt Bitcoin as legal tender, forcing all local traders to accept BTC as a form of payment. In cooperation with global companies such as Bitso crypto exchange and Silvergate Bank, El Salvador launched the official BTC wallet known as Chivo, allowing users to convert BTC transactions to US dollars or to withdraw using a special ATM, with no transaction fees.
As previously reported, the Chivo wallet was temporarily retired for maintenance on launch day. According to several reports on social media, some Chivo wallet users still had major issues with the transaction or withdrawal from Chivo after El Salvador repaired the crypto wallet last week.
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