By
Kseniia Klichova
May 3rd, 2024
Provisions that allowed people in Argentina to declare undeclared crypto assets for tax reasons is no longer part of the reform bill.
The government of Argentina has removed crypto tax provisions from the omnibus bill it presented to the country’s Congress. The bill allowed Argentinians to declare some previously undeclared assets, including crypto.
The Crypto Tax Concessions in Argentina’s Reform Bill
According to the “Law of Bases and Starting Points for the Freedom of Argentines” bill, citizens declaring crypto would not pay tax on the first $100,000 and a maximum of 15% on the rest. Unfortunately, the crypto provision did not get enough political backing and was eventually excluded. A report stated that according to the Argentine Minister of the Interior, Guillermo Francos, the provision was removed to focus on other issues that achieved political consensus.
According to the draft bill, the concession had covered “cryptocurrencies, crypto assets and other similar goods, regardless of who has been their issuer, who is their owner or where they were deposited, guarded or stored.”
Currently, cryptocurrency purchases in Argentina are not taxable. However, citizens must pay taxes on earnings derived from selling crypto. The Argentine tax authority, AFIP, recognizes crypto as a financial asset and applies capital gains taxes.
Despite the removal, the government of Argentina is promoting Bitcoin usage and adoption as part of its economic plan. Last December, the country’s Foreign Affairs Minister Diana Mondino announced that parties to financial contracts could denominate them in any medium of exchange, including Bitcoin. Many see this development as part of President Javier Milei’s strategy to support crypto adoption in Argentina.
Argentina’s decision to allow Bitcoin-denominated contracts came as the country battled economic issues, with a 50% devaluation in the Argentine peso. In the past decade, Argentina has also suffered through 40% inflation. Although Bitcoin is not legal tender in Argentina, the support encourages adoption and helps businesses to retain some value. Among Latin American countries, Argentina has one of the highest crypto adoption rates.
Supporting Cryptocurrency Adoption in Argentina
President Milei, a strong Bitcoin advocate, repeatedly criticized the country’s central bank while campaigning. However, he has not indicated any interest in making Bitcoin or any other crypto asset legal tender. After Milei won the election primaries last August, the price of Bitcoin in Argentina spiked by 21%.
Indicating continued support for crypto, President Milei recently promised not to oppose or discourage Argentine provinces looking to launch their own currencies. Following the devaluation of the Argentine peso by 50% last December, Ricardo Clemente Quintela, the governor of La Rioja province, seeks to develop a different currency.
In an interview with Radio Mitre, Milei said there would be no legal opposition to provincial authorities creating local currencies. According to the president, the market will eventually decide whether or not these currencies are worthwhile. However, he cautioned that “quasi-currencies” might worsen inflation, eventually affecting adopters negatively.
“Those who receive payments in quasi-currencies from irresponsible governors will clearly see a loss of their income…What is not taken from them through budgetary adjustment will be taken from them via inflation in the quasi-currency,” said President Milei.