- The bill, approved by the Senate, proposes the confiscation of Bitcoin and other assets from those who do not report the funds deposited in their accounts on Argentine or foreign exchanges.
- Platforms that submit information about their clients will be rewarded with a portion of the money seized by the government.
- Those who evade the tax will face penalties of up to 7 years in prison and the confiscation of their assets.
On Thursday, May 12th, The Argentine Senate approved a 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 will become taxable and available for seizure for tax evasion under the legislation 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”.
Argentina owes the IMF around $44,000 million, 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 expressed their intent to increase regulations and taxes on cryptocurrencies to increase national revenue.
Nobody Is Safe from the Crypto Tax
The fund, which would be constituted in U.S. dollars, would force residents in Argentina with accounts both in and outside the country to pay taxes on their “crypto assets and other similar ones” which have not been declared “before the Federal Administration of Public Revenues (AFIP)”.
In other words, residents with any cryptocurrencies or other digital asset funds that are deposited on crypto platforms operating outside of Argentina must also pay said tax.
Likewise, the tax will be charged to those who have investments in foreign currency, bonds, real estate, shares in investment funds, or any other property considered to be an asset that has not been reported to the tax body.
Discounts and Punishments for Evaders
If the bill is approved without ammendments, the tax to be paid will be 20% on unregistered and undeclared assets. However, should a taxpayer decide to pay “spontaneously and voluntarily” within six months of the law coming into force, they will receive a discount.
In the event that a taxpayer does not voluntarily pay the tax on cryptocurrencies within the period established by law, the amount to be paid could increase by up to 50%. On the other hand, those who express their desire to pay will be granted a payment term of up to 12 months.
Tax payments must be made in U.S. dollars charged to funds in cryptocurrencies deposited abroad, as indicated in article 12 of the bill. This would force the taxpayer to sell part of their funds in order to pay the debt.
The Confiscation of Cryptocurrencies from Evaders
Article 13 of bill CD 24/22 details the total confiscation of funds in BTC and other cryptocurrencies from those who entirely refuse to pay the tax, in accordance with 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, asserts that possessing digital assets abroad without 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 and wallet platforms with up to 30% of the amount seized from the client for collaborating with governmental efforts.
On the Flipside
- With the approval of the bill still in motion, Argentine investors may be thinking of placing their cryptocurrencies in platforms with a cold storage service (offline) to avoid the risk of confiscation.
- Platforms which 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 be subject to as much as 2 years in prison.