Benzinga | Sep 13, 2021 09:35AM EDT

El Salvador Exempts Foreigners From Capital Gains Taxes On Bitcoin

Days after officially making Bitcoin (CRYPTO: BTC) legal tender, the government of El Salvador has declared that foreign investors will not be required to pay tax on profits from Bitcoin investments.

What Happened: According to a report from AFP, government advisor Javier Argueta said there will be no capital gains taxes on Bitcoin for foreigners.

"If a person has assets in bitcoin and makes high profits, there will be no tax. This (is done) obviously to encourage foreign investment," said Argueta.

"There will be no taxes to pay on either the capital increase or the income."

Aguerta, who serves as legal advisor to El Salvador's president Nayib Bukele, also said the country's Bitcoin wallet would have "relevant mechanisms" in place to ensure traceability.

"We are implementing a series of recommendations from international institutions against money laundering," he said.

The government anticipates that its "Chivo" Bitcoin wallet will give many of its citizens access to bank services for the first time and even save millions of dollars in transfer fees when remittances are sent to the country from abroad.

A report from last week estimated that remittance providers like The Western Union Company (NYSE:WU) could lose as much as $400 million in a year if El Salvador's Bitcoin wallet rollout goes as expected.

Price Action: At press time, Bitcoin was trading at $44,630, losing 2.74% over the past 24-hours. The leading cryptocurrency had a daily trading volume of $30 billion at the time of writing.