Bitcoin: El Salvador’s government will not levy taxes on profits from bitcoin speculation to encourage the use of digital currency in the country. The information was revealed by legal consultant Javier Argueta, who advises Salvadoran President Nayib Bukele, in an interview with Agence France-Presse (AFP) on Friday (10).
According to Argueta, the exemptions from taxes on capital gains and income tax on cryptocurrency are mainly aimed at attracting foreign investors. The move comes three days after El Salvador adopted bitcoin as its official currency, along with the US dollar, which will continue to be accepted.
“If a person has bitcoin assets and makes big profits, there will be no taxes. This is obviously done to encourage foreign investment,” the government advisor told AFP. He added that there will be no taxation “neither on the capital increase nor on the income”.
To promote the use of digital currency, the government is distributing US$30 in bitcoins to each adult citizen of the country who registers in the official digital currency management wallet. The “freebie” attracted a large number of users and even brought down the servers, causing Chivo, as the platform is called, to be temporarily down.
One of the concerns regarding the adoption of bitcoin as El Salvador’s official currency is the use of digital money in criminal activities. But according to Argueta, the Chivo wallet has tools that allow you to track your shipment, thus ensuring greater protection against money laundering.
The government adviser also revealed that bitcoin transactions could be temporarily halted should the cryptocurrency price collapse. This would minimize the impact of extreme currency fluctuations on the country’s inflation, another major risk pointed out by regulators and experts.