In El Salvador, foreign investors will be exempted from taxes on profits from bitcoin transactions. According to France24, in this way the country seeks to attract money.
El Salvador became the first country on September 7 to recognize Bitcoin as a legal tender.
“If a person has assets in bitcoins, and he makes high profits, there will be no taxes for him,” said Javier Argeta, legal adviser to President Nayib Bukele. “There will be no taxes on both capital gains and income.”
Bitcoin’s volatility raises doubts about the currency’s financial stability. To allay concerns, Argeta said that transactions would be temporarily suspended if the value of the cryptocurrency plummeted. The legal advisor added that the crypto wallet that El Salvador is developing for use by citizens will contain an appropriate tracking mechanism so that crypto coins are not used for illegal activities.
After El Salvador recognized the cryptocurrency as an official means of payment, the bitcoin rate fell from 52 thousand to 46.8 thousand dollars. At the time of this writing, the cost of bitcoin is 44.7 thousand dollars. Fears of exchange rate instability and possible illegal operations escalated into street riots. Protesters gathered outside the Supreme Court building, where they burned tires and set off fireworks.