[NEWS] El Salvador to eliminate taxes on foreign investments and remittances under tax reform

The Salvadoran Congress has abolished taxes on foreign investments and remittances in the country as part of tax reform. This reduces the tax rate from 30% to 0%.

El Salvador is known as the first country in the world to make Bitcoin (BTC) a legal currency. I have been purchasing and accumulating Bitcoin since September 2021.

The aim of this tax reform is to promote investment from abroad and revitalize economic activity in El Salvador.

The tax reform will exempt companies that bring capital from abroad from income tax. The tax reform bill was submitted by lawmakers on the 8th of this month with the aim of promoting investment from abroad. The bill proposed to amend existing regulations and define products and profits that are excluded from taxation.

The Ministry of Finance's proposal indicates that "all value received in any concept" acquired from abroad, such as capital movements and remuneration, i.e. loans, remittances, trusts, etc., will be excluded from the El Salvador Tax Reform Act.

"This is a special system. It allows the exemption from income tax on all flows of capital that bring capital into the country in various forms as broadly as possible," said a Salvadoran economist. "The aim is to attract more capital to El Salvador. Investors will be more interested in funds that flow into the country in untaxed ways," he added.

Aggressive Bitcoin Policy

Last December, El Salvador introduced a law that grants citizenship to Bitcoin investors who donate to the government.

At the time, President Nayib Bukele said, "El Salvador has become the most livable country in the world simply because it accepts Bitcoin. In 30 to 40 years, El Salvador can escape from being the poorest country in the world." He also emphasized the success of his policy, saying, "A country with a high crime rate has become one of the richest and most innovative countries in the world because it accepts Bitcoin."

El Salvador was once the world's largest crime power, but President Bukele's policies have eradicated gangs and significantly improved public safety. This situation is also becoming a strength in attracting investment from overseas.

Reference: Reuters
Image: Shutterstock

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