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El Salvador is attempting to entice foreign investment by enacting significant tax cuts on Bitcoin trading.
According to a presidential legal counsel, the government of El Salvador will exempt investors from paying capital gains and income taxes on Bitcoin (BTC).
Javier Argueta, a legal adviser to President Nayib Bukele, is looking to encourage foreign investment through major tax breaks on Bitcoin, Agence France-Presse reported on Sept. 10.
“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 said, adding that El Salvador will impose no taxes on “either the capital increase or the income.”
According to Argueta, the Salvadoran government will actively trace Bitcoin transactions on El Salvador’s official BTC wallet, Chivo, in order to counteract possible unlawful cryptocurrency use. “We are implementing a series of international organisations’ recommendations against money laundering,” he stated.
To mitigate the impact of extreme volatility or price changes, the Chivo wallet would also temporarily cease Bitcoin transactions on the application if the value of Bitcoin fell.
El Salvador became the world’s first country to adopt Bitcoin as legal tender last Tuesday, requiring all local establishments to accept BTC as payment. El Salvador introduced the official Bitcoin (BTC) wallet known as Chivo in collaboration with worldwide organisations such as Bitso crypto exchange and Silvergate Bank, allowing users to convert Bitcoin (BTC) transactions into US dollars or withdraw without suffering transaction fees via a special ATM.
As previously reported, the Chivo wallet was temporarily unavailable for maintenance on the day of its introduction. According to several social media reports, some Chivo wallet users are allegedly still experiencing major issues with transacting or withdrawing from Chivo after El Salvador fixed the crypto wallet last week.