• El Salvador’s President Nayib Bukele has signed the Innovation and Technology Manufacturing Incentive (ITMI) Act, which removes taxation on technological innovations in the country.
• The new law could attract technology-focused companies, and bring development to the nation.
• El Salvador has previously introduced a Bitcoin-backed bond for sovereign debt payments and is establishing a Bitcoin mining infrastructure through its “Bitcoin City” project.
El Salvador Removes Taxation on Technological Innovations
Nayib Bukele, president of El Salvador and a Bitcoin supporter, recently signed a law that removes taxation on technological innovations in the country. This is with an effort to attract innovation-focused companies and bring development to the nation. The Innovation and Technology Manufacturing Incentive (ITMI) Act covers many sectors where complete tax removal applies such as income, property, capital gains and import tariffs.
Opposing US Administration’s High Tax Payments On Cryptocurrency Mining
The US administration wants high tax payments on technological innovations such as cryptocurrency mining but this new law from El Salvador could go far in attracting innovative companies instead of imposing heavy taxes on them. This newly signed law is just one among the many efforts from President Nayib Bukele to push forward for technological growth and development of the country.
El Salvador Establishing A Legal Framework For Bitcoin Bonds
In January 2023, El Salvador established a legal framework for issuing Bitcoin-backed bonds also known as “Volcano Bonds” for sovereign debt payments. The government will also be developing a Bitcoin mining infrastructure by funding the construction of a project dubbed “Bitcoin City” which will have its own power plant run by renewable energy sources such as geothermal energy sourced from nearby volcanoes.
Bringing Development To The Nation Through Tech Innovations
The ITMI Act reveals that complete tax removal applies to software and app programming, AI, computer and communications hardware manufacturing with an aim to draw more tech innovators into El Salvadore who can bring development to the nation through their ideas.
This move from El Salvadore shows that it is indeed moving ahead with tech advancements despite possible opposition from other administrations around the world concerning cryptocurrency mining taxes or any other form of taxation on technology related activities or businesses that can help develop their economy or foster innovation in their society.