The government of El Salvador wants to exempt investors from capital gains tax and income tax on Bitcoin (BTC), a legal adviser to the president said.
Javier Argueta, a legal advisor to President Nayib Bukele, wants to attract foreign investors with substantial Bitcoin tax breaks, Agence France-Presse reported in September.
“If someone has a fortune in Bitcoin and makes high profits, no tax is due. With this, of course, we want to encourage foreign investment,” said Argueta. He added that El Salvador would not levy taxes, “neither on capital appreciation nor on income”.
Argueta also said the Salvadoran government will actively track Bitcoin transactions on El Salvador’s official BTC wallet, Chivo, in an attempt to prevent possible illegal use of the cryptocurrency. “We are implementing the recommendations of international institutions to combat money laundering,” he said.
The Chivo wallet would also temporarily stop Bitcoin transactions on the application if the Bitcoin value collapses enough to minimize the effects of extreme volatility or price fluctuations.
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Last Tuesday, El Salvador became the first country in the world to introduce Bitcoin as legal tender. All merchants in the country must now accept BTC as a means of payment. In collaboration with global companies such as the crypto exchange Bitso and Silvergate Bank, El Salvador has released an official BTC wallet called Chivo, which allows users to convert BTC transactions into US dollars or make withdrawals at a special ATM without incurring transaction fees.
As previously reported, the Chivo wallet temporarily failed due to maintenance work on the day it was introduced. According to several social media reports, some Chivo wallet users are still having major issues with transactions or withdrawals through Chivo. El Salvador made the crypto wallet functional again last week.