El Salvador has eliminated all taxes on technology innovations, including software programming, coding, apps and AI development, as well as computing and communications hardware manufacturing. This move follows the country’s decision to establish Bitcoin as legal tender in September 2021, with President Nayib Bukele seeing the technology as a way to counter hyperinflation and dependence on the U.S. dollar. To expedite technological development, Bukele sent a bill to Congress on April 1, eliminating all income, property, and capital gains taxes on technology innovations.
Along with this initiative, El Salvador has established the National Bitcoin Office (ONBTC) to conduct joint initiatives with Bitcoin entrepreneurs and companies, with the aim of positioning the country as a technological and economic power. This move is part of Bukele’s ongoing efforts to reinvent El Salvador, including promoting tourism, countering terrorism and building regional business hubs. In addition, the country has passed legislation providing the legal framework for Bitcoin-backed bonds known as Volcano Bonds, named after Bitcoin City’s location, set to become a renewable crypto-mining hub powered by hydrothermal energy from the nearby Conchagua volcano.