El Salvador Removes All Technological Taxes To Fight Hyperinflation

El Salvador President Nayib Bukele and First Lady. (photo: twitter @nayibbuekele)

JAKARTA - El Salvador, a country that first legalized Bitcoin as a legal tender, has decided to abolish all taxes on technological innovations. This move is in line with the establishment of the El Salvador National Bitcoin Office (ONBTC), which is also known as the "Bitcoin office".

While legalizing Bitcoin on September 7, 2021, El Salvador President Nayib Bukele sees this technology as a means to fight hyperinflation and dependencies on the US dollar. Over the past 18 months, El Salvador restructured Bitcoin investment and used capital gains on many occasions to rebuild the country.

Continuing this strategy, Bukele believes in reducing tax requirements to accelerate technology development. As promised, on April 1, Bukele officially sent a bill to Congress that effectively removes all income, property and capital taxes on technological innovations "such as software programming, coding, applications, and AI development, as well as the manufacture of computing and communication hardware".

Supporting this initiative is the establishment of a Bitcoin office, a regulatory body to take joint initiatives with Bitcoin entrepreneurs and companies. According to Asociaci total Bitcoin de El Salvador (El Salvador's Bitcoin Association), ONBTC aims to "position the country as the power of technology and the economy in the world."

In addition to trying to bounce back from a financial point of view, Bukele's ongoing efforts to revitalize El Salvador include promoting tourism, fighting terrorism, and building regional business centers.

In early 2023, El Salvador passed a law that provided a legal framework for Bitcoin-backed bonds - Volcano Bonds. The terminology of Volcano Bonds comes from the location of Bitcoin City, which will become a renewable crypto mining center powered by hydrothermal energy from the nearby Conchagua volcano.