Recently, the Argentinian government made an announcement that citizens can avoid certain taxes on their cryptocurrency holdings if they file declarations.
According to Criptonoticias, amendments to money laundering laws now allow exemptions for Argentinians declaring up to $100,000 in Bitcoin (BTC) and other tokens.
Legal Changes and Wrinkles
The new legislation comes with several wrinkles. The tax exemption applies only to those who hold crypto assets on platforms of government-registered exchanges and wallet providers. Crypto assets are considered to be “within Argentina” if they are managed or held on an exchange registered with the National Securities Commission (CNV). However, many Argentinians use international virtual wallets that are not registered with the CNV, as the media outlet pointed out:
“There are [many] virtual wallets that operate internationally. These are not registered with the [CNV], and many Argentines use them.”
Argentina’s central bank will sell US dollars in the country’s parallel foreign exchange markets starting Monday https://t.co/44vu6fe9xh
— Bloomberg (@business) July 13, 2024
Another hurdle is token valuation. The law specifies that calculations of the USD value of coins must be accurate “as of market rates on December 31, 2023.” Otherwise, taxpayers can use the acquisition value if it is higher than the market rates on that date.
This can be a huge problem for many Argentinians holding stablecoins like USDT, as their market value in Argentina is much higher than official rates due to inflation and currency caps.
“Argentina is an anomalous market
where many people buy $USDT and don’t leave
room for much else. We
don’t see this elsewhere. Argentines buy spot
tether and don’t do anything with it.”https://t.co/id4GSywOn4— Paolo Ardoino 🤖🍐 (@paoloardoino) July 8, 2024
Impact of Inflation
Argentinians often pay up to 40% more than the market rate for USD-pegged coins due to long-standing foreign currency restrictions and hyperinflation. Failing to comply with the new law could result in criminal charges. The measures are part of a new Fiscal Package introduced by President Javier Milei.
The CNV has been granted extensive powers to regulate the crypto sector and launched the Registry of Virtual Asset Service Providers (PSAV) in response to recommendations from the Financial Action Task Force (FATF) to prevent money laundering and terrorist financing.
Tax Implications for Crypto Holders
Declaring crypto assets will not exempt all holders from taxes but will avoid a special additional tax on undeclared assets and earnings. Economy Minister Luis Caputo stated that citizens who move their coins “into the Argentine financial system and do not withdraw them before December 31, 2025,” will avoid special tax levies. Those who fail to declare could face tax bills between 5% and 15% of their tokens’ dollar value.
President Milei, who has made several pro-Bitcoin statements, aims to dollarize the Argentine economy and eliminate the fiat peso while increasing adherence to tax laws and combating money laundering and tax evasion.
Sky-high inflation forces Argentina to circulate first 10,000-peso notes https://t.co/ir1d2UaWnC
— Financial Times (@FT) May 7, 2024
