- El Salvador’s President Nayib Bukele has enacted a law that eliminates all taxes on technology innovations, software and app programming, AI, computer, and communications hardware manufacturing.
- The new tax law is expected to boost El Salvador’s technology sector, generate more jobs, and attract foreign investment.
- El Salvador became the first country to make Bitcoin legal tender in 2011 and has accumulated thousands of BTC since then.
El Salvador’s president, Nayib Bukele, a Bitcoin supporter, recently signed legislation that eliminates taxation on technological innovations in the country. The Innovation and Technology Manufacturing Incentive (ITMI) Act revealed a wide range of industries exempt from all taxes.
While countries like the United States want high tax payments on technological innovations like cryptocurrency mining, this new law could go a long way toward attracting innovation-focused companies, which will bring development to the country.
El Salvador Encourages Tech Innovation by Eliminating Taxes
On May 4, 2023, Nayib Bukele took to his official Twitter account to announce that he had signed the new law to ensure that taxes on property, income, capital gains, import tariffs, software and application programming, AI, computer and communications hardware manufacturing are no longer levied.
The ITMI-signed Act has been in the works since March 2023, when El Salvador’s president stated his intention to introduce legislation to protect the country’s innovative technological advancements.
Following his intentions, legislation to eliminate taxation on technological innovations in the country was sent to Congress.
This newly signed law is just one of many initiatives that El Salvador’s president spearheaded to promote the country’s technological growth and development.
According to a Forbes India report from January 2023, El Salvador has established a legal framework and process for issuing Bitcoin-backed bonds, also known as “Volcano Bonds.”
El Salvador’s Bitcoin-backed bond was approved for sovereign debt payments to develop Bitcoin mining infrastructure by funding the construction of a project called Bitcoin City to scale sustainable crypto-mining efforts.
A Welcoming Nation For Innovative Tech and Crypto Mining Firms
The law signed by Nayib Bukele earlier today may promote El Salvador’s national growth and technological development, as well as the growth of manufacturing, technology, and cryptocurrency businesses in the country.
With the no-tax law applicable to the sectors mentioned earlier, innovative companies abroad are incentivized to relocate operations to a country with a favorable tax regime.
The efforts of Nayib Bukele to build a Bitcoin city near the country’s Conchagua volcano will exponentially scale BTC mining activities by corporations.
The energy required for mining will be obtained directly from the volcano, which produces hydrothermal power.
While the United States recently proposed a 30% tax on crypto mining operations, El Salvador maintains a thriving technological innovation ecosystem.
El Salvador became the first country to make bitcoin legal tender alongside the US dollar in September 2011. Since then, the government has amassed thousands of BTC and purchases Bitcoin regularly for its Treasury.
