El Salvador’s Bold Zero-Tax Move: A Tech Haven Awaits
Embracing Tech Innovation with Zero Tax
President Nayib Bukele recently revealed plans to submit a bill to Congress, aiming to remove all taxes on software programming, coding, app creation, AI development, and hardware manufacturing within computing and communications. This bold move is part of the nation’s strategy to establish itself as a cryptocurrency center and attract more tech businesses and startups.
Next week, I’ll be sending a bill to congress to eliminate all taxes (income, property, capital gains and import tariffs) on technology innovations, such as software programming, coding, apps and AI development; as well as computing and communications hardware manufacturing.
— Nayib Bukele (@nayibbukele) March 24, 2023
By offering incentives for innovation, El Salvador aims to foster a flourishing tech ecosystem, driving economic growth and solidifying its position as a crypto leader.
Overcoming Bitcoin Adoption Controversy
Despite the skepticism surrounding El Salvador’s decision to make Bitcoin legal tender, Bukele maintains that this move supports financial inclusion for the unbanked and stimulates economic growth. By waiving taxes on technology innovations and nurturing a Bitcoin mining industry, the country hopes to become a prominent player in the crypto world.
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Introducing the Bitcoin-Backed Volcano Bond
To supplement the tax waiver, El Salvador has also approved the issuance of Bitcoin-backed bonds, known as the Volcano Bond. Named after the nation’s active volcanoes, these bonds will use renewable energy to power the Bitcoin mining industry they are intended to support.
First announced by Bukele in November 2021, the aim was to generate $1 billion for the development of a renewable energy-driven Bitcoin mining sector. However, due to the 2022 crypto bear market, bond issuance faced multiple delays.
Passing the Digital Assets Bill
In November 2022, the digital assets bill was introduced in the Legislative Assembly, where Bukele’s party, Nuevas Ideas, held a significant majority. The bill passed with 62 legislators in favor and 16 against.
Cryptocurrency exchange Bitfinex announced its role as an infrastructure provider for the Volcano Token, a digital token designed to raise capital for the bond issuance. Bitfinex stated that the Volcano Token would help El Salvador reduce its sovereign debt, direct funds towards Bitcoin mining infrastructure, and finance the construction of “Bitcoin City.”
Transform Your Tech Startup with El Salvador’s Tax-Free Initiative
El Salvador’s zero-tax policy for technology innovation is set to reshape the nation’s tech landscape and create a thriving crypto hub. By capitalizing on this unparalleled opportunity, tech startups can secure a competitive edge and contribute to the country’s economic success.