The popular crypto-friendly country El Salvador has taken a huge step to improve economic growth via technology. It recently reviewed its tax system exempting technology innovations to boost developments.
Recall that El Salvador was the first country that made bitcoin legal tender and pushing for more adoption. This latest move is expected to attract more developers into the country, given it has become a tax haven for them.
El Salvador Offers Tax Exemptions For Tech Developers
President Nayib Bukele sent the bill to Congress on April 1. The El Salvador tax exemption covers developers in coding apps and AI development, software programming, communications hardware manufacturing, and computing. It eliminates all import tariffs, income capital gains, and property taxes from these sectors.
Further, Bukele outlined reasons for the tax exemption as the acceleration of manufacturing and innovation, such as semiconductors and microelectronic components. Also, the law aims to make El Salvador the leader in advanced technology manufacturing in Latin America.
Further, the president aims to encourage, diversify and expand Salvadorean human talent toward technology manufacturing. He also wants to boost education and training in advanced technological manufacturing.
The president also established a National Bitcoin Office (ONBTC) to support this recent move. The regulatory body will work hand in hand with bitcoin companies and entrepreneurs in the country.
In a Twitter post, ONBTC announced that it would help position El Salvador as a technology and economic power worldwide.
Notably, President Bukele had promised to pursue this decision on March 24. He made the announcement on Twitter, leading to positive responses as many users saw it as a step towards pushing the country’s tech industry.
El Salvador’s Economic Dev’t Skyrocketed Following BTC Legalization
Bukele had been a moving force driving El Salvador’s economic development. The president took the world by surprise when it legalized Bitcoin as a means of payment in the country.
The move on September 17, 2021 attracted much criticism. Still, on November 2021, the country inaugurated a bitcoin city backed by $1 billion BTC bonds to be a home for “everything around Bitcoin.”
Bukele has continued to push adoption to date and has even established the Bitcoin Association of El Salvador to pursue the initiative further.
Notably, after legalizing BTC, El Salvador’s tourism skyrocketed by 30%. The Minister for Tourism, Morena Valdez, revealed the growth during an interview with a local news agency. She stated that before making BTC a legal tender, El Salvador only saw tourists from neighboring countries.
But after legalizing bitcoin, 60% of the country’s tourists now are from the U.S., boosting their income in foreign currency to $1.4 million beyond the projected $800,000. Also, El Salvador saw a boost in its exports as it grew by 13% in January 2022, beyond the 10.3% recorded in January 2021.
Featured image from NRP and chart from Tradingview.com