Our observation:
In El Salvador the law makes Bitcoin a legal tender in addition to the US dollar and their local currency Salvadoran colon. Therefore its residents can pay their taxes in any one of these currencies and the authorities cannot refuse it. The residents can also pay any of their private and public debts in any one or more of these currencies and legally the creditor cannot refuse them.
In the case of Panama, though its proposed law grants legal status to Bitcoin and Ethereum, it doesn't grant the status of legal tender to these cryptocurrencies. Therefore, if its residents attempts to pay their private or public debts (including taxes) in these cryptocurrencies, the creditor can legally refuse to accept them as not legal tender.
The creditors can of course make an exception and agree to accept these currencies on a case by case basis or for all cases without restrictions. The government of Panama, as a tax creditor, is adopting the latter course of action by making an exception to accept Bitcoin and Ethereum as payment of tax dues from its residents. This exception is quite significant because governments give legitimacy to their own local currency as their legal tender by collecting their tax revenue in their local currency. When the law finally comes into force, we have to wait and see its effect on their local currency.
To reduce any possible adverse effect on its local currency, the tax authorities in Panama may convert the tax revenues paid in Bitcoin and Ethereum to their local currency instantly.
Check out the original article here.
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