El Salvador, the first country to establish Bitcoin (BTC) as a legal tender, made another historic decision to eliminate all taxes on technology innovations. The move runs parallel to the establishment of the National Bitcoin Office (ONBTC) of El Salvador, a.k.a. the Bitcoin office.
When legalizing Bitcoin on Sept. 7, 2021, El Salvador President Nayib Bukele saw the technology as a means to counter the hyperinflation and dependence on the US dollar. Over the past 18 months, El Salvador restrategized Bitcoin investments and utilized capital gains in numerous instances to rebuild the nation.
Moving ahead into this strategy, Bukele believed in winding down tax requirements as a means to expedite technological development. As promised, on April 1, Bukele officially sent a bill to Congress — effectively eliminating all income, property, and capital gains taxes on technology innovations “such as software programming, coding, apps and AI development; as well as computing and communications hardware manufacturing.”
Supporting this initiative is the establishment of the Bitcoin office, a regulatory body for conducting joint initiatives with Bitcoin entrepreneurs and companies. According to Asociación Bitcoin de El Salvador (Bitcoin Association of El Salvador), ONBTC aims to “position the country in the world as a technological and economic power.”
In addition to attempting a financial comeback, Bukele’s ongoing efforts to reinvent El Salvador include promoting tourism, countering terrorism and building business hubs in the region.
Related: El Salvador’s Bitcoin strategy evolved with the bear market in 2022
In the start of 2023, El Salvador passed a legislation providing the legal framework for a Bitcoin-backed bond — known as the Volcano Bond.
The nomenclature of the volcano bonds is derived from Bitcoin City’s location, which is set to become a renewable crypto-mining hub powered by hydrothermal energy from the nearby Conchagua volcano.
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