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 on Sept. 10.
“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 said, adding that El Salvador will impose no taxes on “either the capital increase or the income.”
Argueta reportedly noted that the Salvadoran government would be actively tracing Bitcoin transactions on El Salvador’s official BTC wallet, Chivo, to combat the potentially illegal use of the cryptocurrency. “We are implementing a series of recommendations from international institutions against money laundering,” he said.
The Chivo wallet would also temporarily halt Bitcoin transactions on the application if the value of Bitcoin collapsed to minimize the impact of extreme volatility or price fluctuations.
Related: El Salvador’s largest bank partners with Flexa for Bitcoin payments
Last Tuesday, El Salvador became the first country in the world to adopt Bitcoin as legal tender, requiring all local merchants to accept BTC as a means of 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 Bitcoin (BTC) transactions into the United States dollar or withdraw without incurring transaction fees using a special ATM.
As previously reported, the Chivo wallet was temporarily taken down for maintenance on the launch day. According to several social media reports, some Chivo wallet users are allegedly still experiencing major issues with transacting or withdrawing from Chivo after El Salvador fixed the crypto wallet last week.