El Salvador is famous for its Bitcoin Law and President Nayib Bukele. It’s the first country in the world that.
El Salvador is famous for its Bitcoin Law and President Nayib Bukele. It’s the first country in the world that.
El Salvador has a high danger security level according to our rating. Jurisdiction has 37.9 points (from 100) for safety level in Numbeo crime rating (1). Homicide level (2) is 18.2 per 100,000 inhabitants a year. Story of firearm-related death (3) 78.52 per 100,000 inhabitants a year.
Bitcoin is the legal tender in Salvador according to the Bitcoin Law (4).
Likewise, art. 7 says: "every economic agent must accept bitcoin as a form of payment when it is offered by someone who acquires a good or service".
Last but not least - the US dollar is the main currency in the country.
According to El Economista review (5), there is still a regulatory uncertainty for crypto salaries in Salvador. On the one hand, the labor code lets you pay wages in legal tender. On another hand Nayib Bukele claimed that paychecks should be delivered in national currency.
-Nayib Bukele responded with a tweet in which he mentioned that "salaries and pensions, by law, must be paid in dollars."
-The labor code establishes in its article 120 that: "The salary must be paid in legal tender." And the legal tender currencies in the country are the colon —although it is not in use—, the dollar and bitcoin, thanks to the Bitcoin Law.
-Likewise, article 7 of the Monetary Integration Law does not establish the obligation, but rather the possibility that dollars should be used to pay salaries, since it says: "Wages, salaries and fees may be denominated and paid in colones or dollars."
Quotes from EL Economista (auto-translation from Spanish)
The Bitcoin Law was approved (6) by a local parliament in August 2021. Salvador's legislation allows crypto operations and makes BTC a legal tender in the country. It also approves licensing and taxation procedures for crypto entities. Based on Zawya (7), “the new law paves the way for the acquisition of $1 billion in "crypto bonds" or "volcano bonds.”
However, there is still a need for precise regulation for some types of activity, and only VASP/ICO/Securities have a clear definition in the law. You can check a complete list of possible types of licensed entities in Salvador on official government website (8):
Digital Wallet for Bitcoin
Bitcoin Custodians
Digital Exchanges
Payment Processors
DECENTRALIZED DEFI, ICO, AND STO SERVICES
Others: STAKING, PAYMENT GATEWAY, LIQUIDITY PROVIDER, TOKEN ISSUANCE
Digital Exchange Houses or Exchanges
Others: CRYPTOMONEY INVESTMENT CONSULTANCY
Others: ASSET TOKENIZATION
Others: MINING, BTC INVESTMENT CONSULTANTS, LIQUIDITY PROVIDER
Other: BITCOIN INVESTMENT CONSULTANCY
Others: OTC PAYMENTS
Digital Trading Houses or Exchanges
Billetera Digital para Bitcoin Custodios de Bitcoin Casas de Intercambio Digital o Exchanges Procesadores de Pago DESCENTRALIZADOS DEFI, SERVICIOS ICO Y STO Otros: STAKING, PASARELA DE PAGO, PROVEEDOR DE LIQUIDEZ, EMISION DE TOKENS Casas de Intercambio Digital o Exchanges Otros: ASESORIA DE INVERSIONES EN CRIPTOMONEDAS Otros: TOKENIZACION DE ACTIVOS Otros: MINERIA, CONSULTORES DE INVERSION DE BTC, PROVEEDOR DE LIQUIDEZ Otros: ASESORIA EN INVERSION DE BITCOIN Otros: PAGOS OTC Casas de Intercambio Digital o Exchanges
Federal Regulators in the country are the Central Reserve Bank and the Superintendency of the Financial System.
There are 95 licensed crypto companies (9) in Salvador, including Chivo, Qredo, Paxos Trust Company, Paxful, and OpenNode.
Tax name | Index |
PIT tax Max | 30 |
PIT tax Min | 10 |
Corporate tax (CIT) | 30 |
Max Individual CGT (for crypto) | 30 |
Min Individual CGT (for crypto) | 0 |
Wealth tax Min | 0 |
Wealth tax Max | 0 |
El Salvador has a territorial taxation principle, which makes local income taxable. According to PWC, some types of foreign income, such as securities and financial operations, are still taxable for local citizens (10).
According to a government official, there is also no tax on crypto operations for foreigners in Salvador (11).
However, local citizens have a 10-30% PIT rate, 10-30% CGT rate, and 30% CIT rate. According to Deloitte Business (12), a lower CIT rate - 25%- is applied if annual income is lower than $150.000.
Also based on the Law for the Promotion of Innovation and Manufacture of Technology (13) approved in May 2023 includes:
Eliminating tariffs and taxes for 15 years. This will include the elimination of the income tax and any withholding on income tax, capital gains, municipal taxes on net company assets, customs duties, and transportation taxes, as well as the elimination of taxes on the importation of goods, inputs, machinery, equipment, and tools necessary for the new technology related investments.
1)Crime Index by Country 2023 Mid-Year
2)List of countries by intentional homicide rate
3)List of countries by firearm-related death rate
4)El Salvador’s Bitcoin Law: Full English Text. Article
6)El Salvador Cryptocurrency / Digital Asset License. Article
7)El Salvador passed a law on cryptocurrency transfers. Article
8 and 9)Proveedores Registrados. Registered Providers
10)El Salvador. Overview. PWC
11)No tax on bitcoin profits for foreign investors: El Salvador after recognizing cryptocurrency
12)Deloitte business. PDF-file
13)Law for the Promotion of Innovation and Manufacture of Technology
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