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Argentina Plans to Pay Debt to the IMF with Taxes on Cryptocurrencies

Cryptocurrency May 16, 2022 12:30PM ET
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Argentina Plans to Pay Debt to the IMF with Taxes on Cryptocurrencies
 
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  • The bill approved by the Senate proposes the confiscation of Bitcoin and other assets from those who do not report their funds deposited in Argentine or foreign exchanges.
  • Platforms that rat out their clients will be rewarded by the government with a portion of the money seized.
  • Those who evade the tax will receive penalties of up to 7 years in prison and confiscation of their assets.

The Argentine Senate approved last Thursday the bill that proposes the creation of a “national fund for the cancellation of the debt with the International Monetary Fund” (IMF). Among the assets that can be taxed or seized for tax evasion are Bitcoin and other cryptocurrencies.

Article 2 of the controversial bill, which must now be discussed by the Chamber of Deputies and could have a permanent character, establishes that its objective is “the total cancellation of the debt with the IMF, current and/or future” of the country.

Argentina owes the IMF around 44,000 million dollars, which were recently refinanced through an agreement signed with the government of President Alberto Fernández. Before the signing of the deal, the Argentine government had already given signs of wanting to increase regulations and taxes on cryptocurrencies to increase revenue.

Nobody is Saved from Paying the Crypto Tax

The fund, which would be constituted in US dollars, would force residents in Argentina with accounts inside or outside the country to pay taxes on their “crypto assets and other similar ones” not declared “before the Federal Administration of Public Revenues (AFIP)”.

In other words, all people with funds in cryptocurrencies or any other digital asset, deposited in crypto platforms that operate outside of Argentina, must also pay said tax.

Likewise, the tax will be charged to those who own investments in foreign currency, bonds, real estate, shares in investment funds, as well as any other property that is considered an asset and has not been reported to the tax body.

Discounts and Punishments for Evaders

If the bill is approved without changes by the deputies, the tax to be paid will be 20% on assets not registered or declared. But, if the taxpayer decides to pay the tax “spontaneously and voluntarily” in the next six months after the law comes into force, he will receive a discount.

If the taxpayer does not voluntarily pay the tax on cryptocurrencies within the period established by law, the amount to be paid could be increased by up to 50%. On the other hand, those who express their desire to pay will receive up to 12 months of payment term.

Tax payments must be made in US dollars charged to funds in cryptocurrencies deposited abroad, as indicated in article 12 of the bill. This would force the taxpayer to have to sell part of their funds in order to pay the debt.

Confiscation of Cryptocurrencies to Evaders

Article 13 of the bill CD 24/22 contemplates the total confiscation of funds in BTC and other cryptocurrencies for those who refuse to pay the tax, in accordance with of the Penal Code.

“The definitive confiscation of assets provided for in article 305 of the Penal Code will be applicable in these cases.”

The proposed legislation states that “the assets that are confiscated will be used to repair the damage caused to society, to the victims in particular or to the State. Only to fulfill these purposes may the goods be given a specific destination”.

Senator Oscar Parrilli of the ruling party Frente de Todos and proponent of the bill, considers that having digital assets abroad and not declaring them to the national tax agency causes serious damage to the State.

To facilitate the detection and confiscation of cryptocurrency accounts, the bill proposes to reward exchange or wallet platforms with up to 30% of the value of the funds deposited for collaborating by snitching on their clients.

On The Flipside

  • After this bill was announced, it is likely that Argentine investors are thinking of safely placing their cryptocurrencies in platforms with a cold storage service (offline) to avoid the risk of confiscation.
  • Platform managers who provide false information about their clients could be punished with up to 7 years in prison, according to the bill.
  • While the collaborator (individual or company) who “in any way disseminates, divulges or discloses information related to the collaboration process”, would also receive up to 2 years in prison.

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Argentina Plans to Pay Debt to the IMF with Taxes on Cryptocurrencies
 

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