The government of El Salvador will reportedly exempt investors from paying a capital gains tax and an income tax on Bitcoin (BTC), according to a presidential legal counsel.
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 Sept. 10.
"If someone has Bitcoin assets and makes high profits, there won't be any tax. Argueta stated that this is done to encourage foreign investment. She also said El Salvador would not impose any taxes on the capital growth or income.
Argueta said that the Salvadoran government would actively track Bitcoin transactions on El Salvador’s official BTC wallet Chivo to combat illegal use of the cryptocurrency. He said that a number of international institutions have recommended against money laundering.
If Bitcoin value falls, the Chivo wallet will temporarily suspend transactions. This is to reduce the volatility and price fluctuations.
El Salvador was the first country to adopt Bitcoin as its legal tender. All local merchants must now accept Bitcoin as payment. In cooperation with global companies like Bitso crypto exchange and Silvergate Bank, El Salvador launched the official BTC wallet known as Chivo, allowing users to convert BTC transactions into the United States dollar or withdraw using a special ATM, with no transaction fees.
The Chivo wallet was temporarily removed for maintenance as previously reported. According to social media reports, many Chivo wallet users are still having major problems withdrawing or transacting from Chivo since El Salvador fixed their crypto wallet last week.