El Salvador will exempt foreigners from paying bitcoin taxes to encourage investment, report says

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El Salvador will exempt foreigners from paying bitcoin taxes to encourage investment, report says
Jose Cabezas/Reuters
  • El Salvador will exempt foreign investors from paying taxes on bitcoin profit and income, AFP reported.
  • An advisor to El Salvador's president said the country wants the move to encourage foreign investment.
  • The Central American nation recently made bitcoin legal tender, the first country in the world to do so.

El Salvador, which this month became the first country to make bitcoin legal tender, will exempt foreign investors from paying taxes on their profits from the cryptocurrency, according to an AFP report.

"There will be no taxes to pay on either the capital increase or the income," from bitcoin, Javier Argueta, a legal adviser to El Salvador President Nayib Bukele, told AFP in a report published Friday.

"This (is done) obviously to encourage foreign investment," Argueta was quoted as saying. The Central American country launched bitcoin as legal tender on September 7, in part to help combat persistent hyper-inflation.

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Argueta also the government hopes that bitcoin as a legal payment option will cut millions of dollars off commissions on remittances sent home from abroad, mainly the United States.

El Salvador's rocky rollout of bitcoin, which included technical issues with the country's Chivo national crypto wallet, was cited as a factor in sending bitcoin's price tumbling by at least 17% on the country's launch day. Bitcoin joins the US dollar as national currency in the country but the move has been met with local protests and skepticism about its use, partially because the cryptocurrency is prone to sharp price swings.

Bitcoin on Wednesday slipped 0.2% to $47,805.

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