Argentina Backtracks on Crypto Tax Opportunities in Legislative Bill

Recently, the Argentine administration, led by President Javier Milei, made the decision to remove cryptocurrency tax benefits from the omnibus bill that Congress is now debating. With the “Law of Bases and Starting Points for the Freedom of Argentines,” President Milei will have more legislative authority in addition to other sectoral changes being put into effect.

The Argentine government’s decision to remove provisions allowing the declaration of certain assets, including cryptocurrencies, from the omnibus bill has sparked discussions. Originally, the bill proposed a mechanism for taxpayers to disclose ownership of previously undeclared assets, such as cryptocurrencies, thereby reducing associated payments and fees.

Guillermo Francos, the Minister of Interior, highlighted that the withdrawal was prompted by a lack of consensus in Congress on this specific aspect of the bill. Francos stated, “The proposal is aimed at generating freedom for economic development. It was essential to get this out quickly. The tax part was smaller and delayed treatment.”

Tax Determination and Crypto Regulations in Argentina

Under the initial tax determination of the bill, Argentine citizens could declare ownership of undisclosed assets, including cryptocurrencies. The proposed scheme involved a 0% tax rate for the first $100,000 in value of these assets and a graduated scale, reaching up to 15%, for the remaining undisclosed assets.

In Argentina, the act of holding cryptocurrencies itself does not trigger tax obligations. However, any profits obtained from the sale of cryptocurrencies are subject to taxation, as clarified by Marcos Zocaro, an Argentine accountant.

Cryptocurrencies must pay taxes according to the location of the assets as they are recognized as financial assets by the Argentine Tax Inspectorate, or AFIP. Every year on December 31st, the most recent market value is taken into account for tax calculations.

In an effort to garner more support, the omnibus package is undergoing substantial revisions in preparation for possible passage in Congress. Notably, an emergency presidential order that deregulated important sections of Argentina’s economy and permitted leasing contracts to be settled in bitcoin was earlier issued by President Milei. The government’s attempts to successfully navigate legislative deliberations and achieve comprehensive changes are in line with the decision to remove measures pertaining to cryptocurrencies from the bill.