El Salvador will go down in history as the first-ever nation to make Bitcoin as a legal tender. After various noteworthy Bitcoin-related regulations, the nation has now decided to bring radical changes in its taxation laws.
Cointelegraph reported that the Legislative Assembly of El Salvador approved a new amendment to reduce income tax for foreign investments and remittances from 30% to 0%.
At the time, the nation has not placed an effective limit on the amount. President Bukele confirmed the news on X in a 12th March post. He noted that Congress reformed the income tax laws for international investments and money transfers.
The legislative assembly of El Salvador noticed in a separate post that this policy was enforced with 69 votes out of 84 participants.
New Income Tax Reforms
A Cointelegraph article noticed that 69 votes approved the new Income Tax reforms. In this manner, family remittances or capital from foreign sources is able to enter the country free of tax obligations regardless of the amount.
El Salvador has made some radical changes to its Bitcoin policies since 2019 after the appointment of President Bukele. By 2021, he had passed the bill to make Bitcoin a legal tender in the country.
El Salvador’s Bitcoin Acquisition Plans
El Salvador opened the national Bitcoin reserve with a purchase of 200 Bitcoins in the Treasury balance sheet. In recent years, the national economy underwent a massive growth. In 2019, the GDP of Salvador was around $24.9 billion as per World Data Bank statistics.
However, by 2022, the number reached around $33 billion. These estimates indicate a 2.8% growth in 2023.
The analysts at Cointelegraph recently reported that the nation printed $85 million in profits since Bitcoin reached a new ATH of $72,000 on 10th March. President Bukele was elected for the second time at the helm of the nation on 4th February and received around 85% votes as per local media outlets. The tax relaxation coincided with tax reforms for the local tech industry.
The nation reportedly lifted all tax obligations related to tech innovations in the nation starting in April, 2023. Cointelegraph passed a bill to eliminate income, property, and capital tax obligations on tech sector such as software programming, application development, and AI coding.
At the same time, the new guidelines facilitated computer and communications hardware manufacturers.
Various Bitcoin advocacy groups such as The Crypto Council for Innovation, Paradigm, Satoshi Action Fund, Legilex, Texas Blockchain Council, and the US chamber of Commerce are filing amicus briefs.
The subject matter of these briefs is to encourage the SEC for establishing regulatory guidelines aimed at cryptocurrencies. These amicus briefs arise after an appeal from Coinbase.
Coinbase reportedly called upon SEC regulators to establish clear guidelines for the crypto industry. These briefs were submitted at the third circuit court of appeals on 18th March.
As per Cointelegraph, the details of these documents noted that SEC does not offer clear guidelines for market participants operational within US jurisdiction. The brief further noted that under these circumstances companies are more inclined towards leaving the nation.
A joint filing from Satoshi Action Fund and Texas Blockchain Council called for a need of clear rules and adequate notice approved by the congressional authority. Such a development deems important in the context that SEC is working on implementing adverse consequences and liability on digital assets firms for past actions that happened in good-faith based on SEC’s authoritative position.
Crypto Community Extends Support to Coinbase
The amicus brief filing also adds weight to Coinbase appeal as part of the petition filed by the exchange in July, 2022. This petition required the SEC to establish clear rules regarding tokens classified as unregistered securities.
The regulatory agency banned the petition in December 2023 only 6 months after filing an enforcement action against Coinbase. The legal rebuttal was focused on putting Coinbase on trial for dealing in unregistered securities and violating securities laws.
Coinbase lawyers filed an appeal against the decision that resulted in the recent amicus briefs. CCI chief noticed that SEC’s denial of rulemaking petition goes against ethical regulatory approach and shake confidence in domestic markets.
