thecoinrise.com
In a bold move aimed at bolstering international investments and incentivizing remittances, the Legislative Assembly of El Salvador has passed a groundbreaking measure reducing the income tax on such transactions from 30% to 0%.
President Nayib Bukele broke the news via social media platform X in a post on March 12, heralding a significant shift in the country’s tax policy.
“Congress has reformed our income tax law, for international investments and money transfers, dropping the rate from 30% to 0%,” President Bukele announced.
El Salvador to Attract Foreign Investments
The measure received overwhelming support in the legislative assembly, with 69 votes in favor out of, presumably, 84, according to a separate post by Asamblea Legislativa.
The reform effectively exempts family remittances and any capital inflows from abroad from income tax obligations, irrespective of the amount transferred to El Salvador.
Another Milestone for Bukele
El Salvador’s decision to eliminate income tax on foreign investments and remittances represents another milestone in the country’s trajectory under President Bukele’s leadership.
Since assuming office in 2019, Bukele has implemented a series of transformative policies, including declaring Bitcoin as legal tender in 2021 and purchasing 200 BTC for the nation’s reserves.
The economic repercussions of these initiatives have been notable, with El Salvador experiencing consistent economic growth. Data from the World Data Bank indicates that the country’s gross domestic product (GDP) surged from $24.9 billion in 2019 to $32.4 billion by 2022. Projections also suggest a 2.8% growth rate for 2023.
El Salvador in Profit on BTC Holding
The recent surge in Bitcoin prices has further bolstered El Salvador’s financial position, with the country’s 2021 Bitcoin purchase yielding a remarkable $85 million profit since BTC surpassed the $72,000 threshold in the week of March 10.
President Bukele’s overwhelming reelection in February, with reportedly over 85% of the vote, underscores strong public support for his administration’s policies. The latest tax code adjustment follows a pattern of pro-business reforms, with El Salvador previously eliminating taxes related to tech innovation in April 2023.
This move aimed to stimulate the technology sector by abolishing income, property, and capital gains taxes on innovations such as software programming, app development, and AI technology.
New Law to Lure Investments
El Salvador has passed a new law to extend citizenship to foreign investors who hold a significant stake in Bitcoin (BTC).
Interestingly, this move, a first of its kind globally, showcases the country’s commitment to embracing digital innovation and attracting foreign investment in the burgeoning cryptocurrency space.