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Argentine Government Removes Tax on Bitcoin

Last Updated February 2, 2024 12:20 PM
Teuta Franjkovic
Last Updated February 2, 2024 12:20 PM

Key Takeaways

  • President Milei’s pro-crypto stance is reflected in removing mandatory crypto declaration and taxation.
  • Holding crypto remains untaxed, but capital gains above a threshold trigger taxation.
  • A controversial shift allows anonymous crypto holdings, raising questions about transparency.

The recently inaugurated government of Argentina, under the leadership of President Javier Milei, who is recognized for his strong liberal stance and support for Bitcoin, has introduced a comprehensive bill  to the legislative body translated as “Law of Foundations and Initial Measures for Argentinian Liberty”.

Milei is renowned for his advocacy for dismantling the nation’s central bank and for introducing a range of bold policy propositions that have garnered significant interest from the cryptocurrency community.

Minister Advances Bill to Ease Tax Regulations, Excluding Crypto

Pushed forward  by Interior Minister Guillermo Francis, the proposed legislation aims to alleviate tax burdens across various sectors in Argentina. Notably, it omits any provisions regarding cryptocurrencies, effectively eliminating their tax declaration.

Previously, owners of digital assets had the privilege of declaring their holdings, benefiting from a favorable fixed tax rate: no tax for holdings below $100,000 and a 15% tax for those exceeding this amount. The removal of this benefit has ignited debate and dissatisfaction.

Critics argue that this move contradicts President Javier Milei’s known support for cryptocurrencies, labeling the tax policy as unfairly biased. In response, Minister Guillermo Francis points to a lack of consensus among political factions as the reason behind this controversial decision.

A Bold Legislative Move Shaping the Future of Crypto

Should the proposed legislation pass, holding cryptocurrencies in Argentina will not incur taxes, as detailed by accountant Marcos Zocaro. Tax obligations will arise only from capital gains generated through sales, and that too below a specific threshold.

Zocaro explained :

“In the case of an individual, for the simple act of buying what the law calls digital currency, no tax is paid. What is taxed on profits, is the profit made from the sale and there is also a minimum below which no tax is to be paid“.

Moreover, international transfers of cryptocurrencies will be subject to a tax rate ranging from 5 to 15%, a strategy designed to attract foreign cryptocurrency investments, as per industry specialists.

In a significant policy shift, the government maintains its robust endorsement of the cryptocurrency sector. Notably, the bill proposes a provision for the declaration of cryptocurrencies without necessitating evidence of their origin.

Reiterating this supportive stance, Diana Mondino, the Minister of Foreign Affairs, expressed via X that cryptocurrencies will continue to play a role in Argentina’s financial landscape, albeit within certain frameworks.

Reflecting President Javier Milei’s ambition to position Argentina as a crypto-friendly nation, this bill, despite its complexities, marks a pivotal chapter. Its progress is poised to be a focal point in the nation’s legislative discussions in the weeks ahead.

Could Cryptocurrencies Rejuvenate Argentina’s Economy?

In Argentina, cryptocurrencies offer a potential bulwark against inflation for the workforce, helping to safeguard their earnings. Employers, too, stand to gain, with opportunities for streamlined international transactions and reduced reliance on the nation’s unstable banking sector.

Yet, the journey towards broad cryptocurrency adoption is fraught with hurdles. It requires domestic companies to embrace and advocate for cryptocurrencies as legitimate payment options. Concurrently, the government must foster an ecosystem conducive to this digital shift.

With the right policies and acceptance, cryptocurrencies could indeed become pivotal in fortifying the financial well-being of both the Argentine workforce and the broader economic framework.

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