3 - 5 minute read
El Salvador has made headlines recently with its decision to declare Bitcoin as legal tender. However, the country is not stopping there. In a bid to promote technological development, the government has decided to remove all taxes on technology innovations. The move has been hailed as a significant step towards positioning the nation as a technological and economic powerhouse on the global stage.
The National Bitcoin Office (ONBTC), or the Bitcoin office, was established to provide a regulatory framework for collaborating with Bitcoin entrepreneurs and businesses. The move has already started to pay dividends, with the country using the profits from Bitcoin investments to rebuild its economy over the past 18 months.
President Nayib Bukele’s strategy of promoting technological development has been in full force since assuming the presidency. In April, he followed through on his promise by introducing a bill to Congress that would eliminate income, property, and capital gains taxes on technology innovations. The move covers areas such as software programming, coding, apps, and AI development, as well as the manufacturing of computing and communications hardware.
The idea behind the initiative is to support the country’s technological growth and development in the long run. In addition, it aligns with the establishment of the National Bitcoin Office, positioning the country as a technological and economic powerhouse on the world stage.
Reviving the Country’s Economy
Apart from seeking to revive the country’s economy, President Bukele is also making ongoing attempts to transform El Salvador by promoting tourism, combating terrorism, and establishing regional business centres. The move to establish a legal framework for issuing Bitcoin-backed bonds, known as Volcano Bonds, is one such initiative. The name is inspired by the location of Bitcoin City, situated near the Conchagua volcano, and is being developed as a sustainable crypto-mining centre. The energy required for mining will be sourced from hydrothermal power generated by the volcano.
What Does This Mean for Traders?
The decision by El Salvador to eliminate taxes on technology innovations is a significant step towards positioning the country as a technological and economic powerhouse. The move will undoubtedly create a favourable environment for technology entrepreneurs, businesses, and investors looking to invest in the country.
However, traders must exercise caution when investing in the country. Trading carries a high level of risk, and investors must do their due diligence before investing in any asset. While the move is a step in the right direction, it is essential to note that the country is still grappling with issues such as corruption, high crime rates, and political instability.
El Salvador’s decision to eliminate taxes on technology innovations is a significant step towards positioning the country as a technological and economic powerhouse. The move aligns with the establishment of the National Bitcoin Office, which is intended to support the country’s technological growth and development in the long run. While the move is a step in the right direction, traders must exercise caution when investing in the country. It is essential to do your due diligence before investing in any asset, and remember that trading carries a high level of risk.