El Salvador, which recently adopted Bitcoin as its legal tender, is reportedly planning to exempt foreign investors from taxation on Bitcoin capital gains, Fench media outlet Agence France-Presse reported the news on Sept. 10.
The report contained statements from the legal adviser to President Nayib Bukele, who encouraged foreign investments via tax exemption.
“If a person has assets in bitcoin and makes high profits, there will be no tax. This (is done) obviously to encourage foreign investment,” said Javier Argueta, legal counsel to the Bukele administration. It was also revealed that foreign investors will also be exempted from capital increases and income.
The move of adopting Bitcoin as a legal tender was massively discouraged inside and outside the country, with potential fears of money laundering and other illegal activities.
Argueta explained that under the guidance of an international organization, El Salvador’s official Bitcoin wallet app “Chivo” is in the process of introducing anti-money laundering (AML) and traceability functions. He noted:
“We are implementing a series of recommendations from international institutions against money laundering.”
He added that if the value of Bitcoin plummets, transactions on the app could be temporarily suspended in order to minimize the effects of extreme price fluctuations.
El Salvador has just enforced the Bitcoin Act on the 7th, becoming the first country to adopt Bitcoin as a legal tender.
The country’s government had said that this experiment would allow the country’s citizens access to bank services for the first time and might remove millions of dollars the country pays in remittance fees. According to various data, One-fifth of the country’s GDP relies on remittances.
The law’s article 7 mandates all local merchants to accept BTC as a means of payment. In the country, which boasts a population of 6.48 million, acceptance of Bitcoin payments has begun at various stores such as McDonald’s and Starbucks.