The Legislative Assembly of El Salvador has recently approved a measure to eliminate income tax on foreign investments and remittances, reducing the rate from 30% to 0% with no limits on the amount.

President Nayib Bukele shared this news on social media, stating that the income tax law has been reformed to benefit international investments and money transfers.

With 69 votes in favor, the measure was approved by the legislative assembly, allowing family remittances and capital from abroad to enter the country without any tax implications, irrespective of the amount.

El Salvador has seen significant changes since Bukele took office in 2019. In 2021, Bitcoin was declared legal tender in the country, and El Salvador purchased 200 bitcoins for its reserves. The economy has shown consistent growth, with the gross domestic product increasing from $24.9 billion in 2019 to $32.4 billion in 2022, with a projected 2.8% growth for 2023.

A recent report from Cointelegraph revealed that El Salvador’s 2021 bitcoin purchase yielded a profit of $85 million as Bitcoin surpassed the $72,000 mark.

Bukele was reelected in February 2024 with an overwhelming majority of the vote.

This recent tax code adjustment follows El Salvador’s decision to eliminate all taxes related to tech innovation in April 2023. The country passed a bill to abolish income, property, and capital gains taxes on technology innovations such as software programming, coding, apps, AI development, and hardware manufacturing.

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