Since bitcoin is legal tender countrywide, the experience you mention won’t be specific to the city itself once built, but rather a de facto countrywide possibility.

On the matter of Bitcoin City itself, I personal have conflicted thoughts:

On the one hand, it could become an international business center, with bitcoin at it’s core. That’s probably one of the main aims behind the project. The VAT taxation only policy is secondary, and likely a transitory pole of attraction for people to pivot business and residence there.

On the other hand, it could turn out to be a bit like the story of the milkmaid and her pail. @Bukele is counting on the bonds to get the project kick-started, but he will still require 17 fold ,just to cover the estimated cost of the public infrastructure. He’s betting highly on bitcoin price going up to pay up for some of the announced projects, and though everyone hopes he’s right (greatly for the sake of each one’s pocket’s sake), there is a chance that these project may meet dire problems if the tide turns for a sustained period of time.