El Salvador’s government has announced that bitcoin revenues will be tax-free for overseas investors. On September 10, a government adviser revealed the information, a move that will encourage more entrepreneurs and investors to come to the country. Javier Argueta, the legal counsel to El Salvador’s President Nayib Bukele, told AFP: “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 also stated that the country was collaborating with foreign organisations to put in place compliance procedures. Traceability and the prevention of illicit financial activity have been identified as major concerns by global financial authorities such as the International Monetary Fund (IMF). The ratification of bitcoin as legal cash is proving to be difficult for the country, despite the fact that it is still in its early stages. From the opposing party to international organisations, there has been condemnation from all sides. The government, however, has not been discouraged by the opposition.
The Chivo Wallet, El Salvador’s official bitcoin wallet, debuted on September 7 with a $30 BTC welcome bonus for new users. To prepare for the move, the government purchased 400 bitcoins, which isn’t going as planned. It’s unclear how the transition will play out in the medium and long run. Critics have raised a variety of concerns, the most serious of which is volatility. Internal ministers in El Salvador have raised the issue, claiming that the volatility could compromise salary payments.