El Salvador Slashes Income Tax on Foreign Investments to 0%
Summary:
El Salvador's Legislative Assembly has approved reducing income tax on overseas investments and remittances from 30% to 0%. President Nayib Bukele announced this on social media. This tax reform, approved by a majority of lawmakers, allows any foreign capital to enter the country tax-free. Bukele's presidency since 2019 has seen marked economic growth and radical policy changes, like Bitcoin being declared a legal tender. The country has also recently eliminated all taxes associated with tech innovation.
El Salvador's Legislative Assembly has greenlit a proposal to slash income tax on overseas investments and remittances from a hefty 30% down to a neat 0%, with no threshold imposed on the sum. The country's President, Nayib Bukele, broke the news over the X social network platform in a post dated March 12, saying, “Our Congress has overhauled the income tax rules pertaining to foreign investments and remittances, bringing the tax rate down from 30% to zero.”
El Salvador's legislative assembly, Asamblea Legislativa, confirmed in another X post that the proposal attracted approval from 69 out of the total 84 lawmakers, assuming none were abstaining or missing. A Google translation from the native Spanish reads, “The Income Tax Law was amended with the approval of 69 lawmakers, making it possible for family remittances or any overseas capital to enter the country tax-free, with no regard for its volume.”
Since Bukele ascended to power in 2019, El Salvador has undergone significant transformation. Notably, in 2021, Bitcoin was declared a lawful medium of exchange across the entire nation, and 200 bitcoins were added to the state's reserve. The nation's economic performance has gradually strengthened during this period. The gross domestic product (GDP) stood at $24.9 billion in 2019, as per data from the World Bank, but rose to $32.4 billion by 2022. Projections show a potential growth of 2.8% for 2023. As recently highlighted by Cointelegraph, Bitcoin's rise above the $72k mark in the week leading up to March 10 generated a profit of $85 million from El Salvador's 2021 Bitcoin investment. Bukele managed to secure another term after winning over 85% of the total votes cast in the election held on February 4, 2024.
This latest reshuffling of the tax regime follows El Salvador's decision to scrap all tech-related taxes in April 2023. As pointed out by Cointelegraph, the nation approved a legislation that removed income, property, and capital gains taxes from tech advancements “like software development, programming, apps and AI, and the manufacture of computing and telecommunications hardware.”
Published At
3/13/2024 11:23:20 PM
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