El Salvador Announces Tax Exemption on Bitcoin Profits

El Salvador Announces Tax Exemption on Bitcoin Profits

The country is planning to exempt foreign investors from taxes on BTC profits.

Last week, El Salvador recognized Bitcoin as legal tender in the country. Now, the Central American nation announced that it is planning to attract international crypto companies and Bitcoin investors through an exemption on BTC profits.

According to a report published by AFP, the country will exempt foreign investors from taxes on the capital increase or the income related to Bitcoin. “If a person has assets in bitcoin and makes high profits, there will be no tax. This (is done) obviously to encourage foreign investment. There will be no taxes to pay on either the capital increase or the income,” Javier Argueta, legal adviser to President Nayib Bukele, told AFP.

On September 7, Nayib Bukele announced the purchase of 150 Bitcoin and mentioned that the country holds 550 BTC. The current value of El Salvadors BTC holdings stands at around $24 million. The country received immense support from the global crypto community after the recognition of Bitcoin as legal tender in the region.

However, regulatory authorities around the world raised some serious concerns about El Salvador‘s recent BTC adoption. In the latest discussion with AFP, Argueta highlighted the country’s efforts to eliminate the use of cryptocurrencies in illegal activities. “We are implementing a series of recommendations from international institutions against money laundering,” Argueta said.

Bitcoins Price Action

Last week, BTC saw a surge in volatility as its price dropped from $52,000 to as low as $43,000 within 12 hours on 7 September. Commenting on the latest price action of Bitcoin and El Salvadors BTC adoption, Simon Peters, Market Analyst at eToro, said: “On the day bitcoin became legal tender in the Central American nation of El Salvador, the price of bitcoin plummeted by over $7,000 in seconds. The day saw a spike of liquidations as the token was adopted as an official currency of the country, with Salvadorians now allowed to transact for everyday items in the crypto asset.”