In an audacious move to stimulate international investment, El Salvador has announced the complete removal of income tax on inward investment and remittances. This major step is part of comprehensive tax reforms aimed at attracting foreign capital and stimulating economic growth.
President Nayib Bukele revealed the decision in a message posted on social media platform X, highlighting the swift action of Congress to reform the country's income tax laws.
El Salvador Tax Reform : From 30% to 0%
Under the new reforms, tax rates on international investments and remittances will fall from 30% to 0%. This cut is expected to encourage capital inflows, particularly in the form of remittances and business investment.
Congress has reformed our income tax law, for international investments and money transfers, dropping the rate from 30% to 0%.
Congress has reformed our income tax law, for international investments and money transfers, dropping the rate from 30% to 0%.
La Asamblea ha reformado la ley del impuesto sobre la renta, para inversiones internacionales y transferencias de dinero, bajando la tasa del 30% al 0%. https://t.co/YRDVegSbb5
— Nayib Bukele (@nayibbukele) March 13, 2024
Previously, income exceeding $150,000 was subject to a 30% tax upon entering the country. Legislator Suecy Callejas emphasized that the main objective of this reform is to revitalize the economy and promote job creation. The reform's main objective is to stimulate domestic and foreign investment in order to revive the economy and create new job opportunities.
By encouraging the inflow of foreign capital, El Salvador aims to support economic activity and promote sustainable growth. This strategic initiative underlines the government's commitment to creating a favourable environment for investment and entrepreneurship.
El Salvador's Congress unanimously approved the tax reform, highlighting the widespread consensus on the need to attract foreign capital. With 69 votes in favour and none against, and minimal abstentions, the decision reflects a resounding mandate to move the country's economic agenda forward.
El Salvador takes an interest in Bitcoin
The taxation stance fits with El Salvador's broader strategy to position itself as a top destination for foreign investment and innovation. The country's interest in Bitcoin and cryptocurrencies further highlights its forward-thinking approach to economic development. Having accepted bitcoin as legal tender and actively accumulated the cryptocurrency, El Salvador has garnered international attention for its pioneering initiatives in the digital asset space.
The government has also introduced legislation offering citizenship to Bitcoin investors who contribute to the country's development. Renowned investor Tim Draper has praised El Salvador's adoption of Bitcoin, predicting a transformative impact on its socio-economic landscape.