Following the removal of all taxes associated with technological innovations in April 2023, El Salvador has taken yet another significant step in its tax reform journey. In a significant move towards becoming a bitcoin-friendly destination, El Salvador taxes were eliminated by the government for international investments and money transfers, previously capped at 30%.
The recent approval by the El Salvadoran Congress aligns with the nation’s vision of establishing a tax-free haven for IT projects.
Reform of El Salvador Taxes: 69 Affirmative Votes
President Nayib Bukele announced the groundbreaking decision on social media platform X, stating, “Congress has reformed our income tax law, for international investments and money transfers, dropping the rate from 30% to 0%.”
In an update shared on X, the Asamblea Legislativa, El Salvador’s legislative assembly, announced the approval of the measure with 69 affirmative votes, out of an assumed total of 84, excluding any absences. The assembly stated:
“With 69 votes in favor, we reform the Income Tax Law so that family remittances or any capital from abroad is introduced into the country free of payment of this tax, regardless of the amount.”
Tech Talent Hub
This move positions El Salvador as an attractive destination for international investments and aligns with its long-term plan to become a hub for technology talents. Notably, the latest development follows the country’s decision in 2023, when it enacted legislation to completely waive income, property, and capital gains taxes on various tech innovations.
This includes software programming, coding, apps, and AI development, along with computing and communications hardware manufacturing.
While rumors circulate about potential sovereign investors exploring Bitcoin opportunities in El Salvador, the country remains actively engaged in Bitcoin mining through its Volcano Energy program. The Central American nation aims to build one of the most powerful bitcoin mining facilities globally, using renewable resources, boasting a promised mining capacity of up to 241 MW.
Major Profits from Strategic Ventures
El Salvador is reaping substantial profits from its strategic Bitcoin ventures, spearheaded by Bukele, who was reelected as the country’s president on February 4. Responding to a tweet by prominent digital asset influencer Crypto Rover, Bukele recently unveiled a range of income sources, including Bitcoin revenue generated through the nation’s passport and citizenship program, and earnings from solar energy-powered mining operations.
Bukele’s visionary leadership has been instrumental in El Salvador’s bitcoin journey, notably declaring BTC as legal tender in 2021 and acquiring 200 BTC for the country’s coffers. Since then, the nation has experienced remarkable economic growth. According to data by World Data Bank, the gross domestic product climbed from $24.9 billion in 2019 to $32.4 billion in 2022.
El Salvador’s Bitcoin portfolio, tracked meticulously on NayibTracker, currently stands at an impressive $207 million. This valuation marks a remarkable 70% surge from its initial investment, translating to a staggering increase of $85 million.
As Bitcoin-powered services, such as Volcano investment bonds, digital citizenship, and business tax relief gain traction, El Salvador is poised to emerge as the global bitcoin hub. These strategic investments, coupled with the country’s commitment to tax reforms and fostering innovation, paint a promising picture for El Salvador’s future in the digital asset landscape.
