<p>El Salvador&#8217;s President Nayib Bukele has officially signed a law eliminating taxes on technology innovations. The Innovation and Technology Manufacturing Incentive Act will remove income, property, capital gains, and import tariffs for technology innovations. This move strengthens El Salvador&#8217;s position as a haven for technology development.</p>



<h2 id="supporting-tech-development-and-industry-growth">Supporting tech development and industry growth</h2>



<p>The new act covers various technology innovations, including software and app programming, AI, computer, and communications hardware manufacturing. El Salvador aims to attract more tech companies and developments by eliminating taxes and offering economic benefits for various businesses.</p>



<p>In March, President Bukele revealed his plan to propose a bill to safeguard the nation&#8217;s technological progress. Following this, the legislation was forwarded to Congress to remove taxes on various tech advancements. Now the President of El Salvador has signed a law that eradicates all taxes on technology innovations. Bukele also announced the enactment of the bill and his signature on Twitter.</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">I’ve just signed into law, the INNOVATION AND TECHNOLOGY MANUFACTURING INCENTIVES ACT, that eliminates all taxes (income, property, capital gains and import tariffs) on technology innovations, software and app programming, AI, computer and communications hardware manufacturing. <a href="https://t.co/rZtGzPgVzW" rel="nofollow" target="_blank">pic.twitter.com/rZtGzPgVzW</a></p>&mdash; Nayib Bukele (@nayibbukele) <a href="https://twitter.com/nayibbukele/status/1654121271548866560?ref_src=twsrc%5Etfw" rel="nofollow noopener" target="_blank">May 4, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Due to unclear regulations, regulatory challenges have hindered the growth of certain sectors, such as generative AI and crypto. El Salvador&#8217;s new law offers an alternative environment to encourage the development of these industries.</p>



<h2 id="contrasting-approach-to-u-s-legislation">Contrasting approach to U.S. legislation</h2>



<p>While El Salvador moves to support technological advancements with tax incentives, the U.S. administration, under the Council of Economic Advisers (CEA), has proposed the Digital Asset Mining Energy (DAME) tax. </p>



<p>The CEA <a href="https://www.cryptopolitan.com/white-house-defends-30-crypto-mining-tax-proposal/">argues </a>that a 30% tax on crypto miners is necessary to mitigate the environmental and societal damage caused by high-energy consumption in the industry.</p>

El Salvador eliminates taxes on tech innovations

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