Bitcoin Foreign Investment won’t be Taxed in El Salvador

Nayib Bukele, President of El Salvador, is trying to attract capital from abroad to help grow the Bitcoin industry in the country. This comes after the controversial process he took to make the cryptocurrency legal.

An apparently recent executive decision could prove to be very beneficial for El Salvador’s bitcoiners… so long as they aren’t foreigners.

Javier Argueta (legal advisor to President Nayib Bikele for AFP) said that foreign investors who have made profits with Bitcoin won’t be subject to capital gains taxes.

“If someone has bitcoin assets and makes high profits, there won’t be any tax. This is done to encourage foreign investment. The income or capital growth will not be subject to taxes.

According to the current Law, capital gains are subject to a flat rate 10% on net profits. Capital gains from securities are also subject to tax.

Article 5 of Bitcoin Law says that bitcoin exchanges are exempt from capital gains taxes, just like legal tenders.

The Law does not mention any exemptions for traders, foreign businesses or industries.

El Salvador: Politics and Bitcoin Have a Strange Friendship

Argueta’s words are a strong incentive to more companies to set up shop in El Salvador. Nayib Bukele, a former diplomat, has been hinting at the possibility of opening the country up to foreign capital to help develop Bitcoin-related services.

Even Strike, the cryptocurrency application, played an important role in the development and implementation of the Bitcoin Beach project in El Zonte long before the Bitcoin Law was in force.

Argueta’s promises have not been validated by any executive order or interpretation. Contradictions in the application of the Law are common in Salvadoran politics.

One of the most well-known cases is President Bukele’s declarations. He assures that Bitcoin adoption will be voluntary and that it will not cost anything, despite the Law requiring that it be accepted.

Private Capital could be the key to Bitcoin’s growth

Bitcoin has had a difficult debut in El Salvador.

The first case involved a series popular protests and criticisms that let the world know that people were not enthusiastic about the adoption of cryptocurrency.

Eventually, multilateral financial institutions began to reject El Salvador’s decision. Only one central American institution supported El Salvador’s decision.

It is therefore not surprising that El Salvador’s president is open to any help from the private sector. Many influencers on Crypto Twitter admire Bukele’s policies. A tax exemption might be more appealing to many new billionaires.

A Salvadoran citizenship is available for just 3 BTC if you’re one of the Bitcoin-friendly enthusiasts who are willing to relocate to the first country that is 100% crypto-friendly.

Author: Paul Williams