In a recent legislative move, Argentine President Javier Milei, along with Economy Minister Luis Caputo, has made the decision to scrap proposed tax exemptions for cryptocurrencies, thereby altering a significant aspect of the ‘Bases and Starting Points for the Freedom of Argentines’ bill. This decision marks a notable departure from Argentina’s previously more favorable stance towards Bitcoin and other digital assets.
Initially, the bill included provisions for asset regularization, proposing a one-time tax on various types of undeclared assets, including cryptocurrencies. Under the original draft, Argentine citizens could disclose ownership of previously unreported assets, such as cryptocurrencies, with a 0% tax rate applied to the first $100,000 in value, and a tax rate of up to 15% on assets exceeding this threshold.
However, President Milei and Minister Caputo decided to remove this section of the bill on Friday, citing delays in the legislative process. Guillermo Francos, the Minister of the Interior, explained that the fiscal aspect of the bill was a minor component that was hindering progress in Parliament. He emphasized that the primary objective of the Bases Law is to promote economic freedom and development, and the removal of the tax section was deemed necessary to expedite this objective.
The removal of tax exemptions for cryptocurrencies has sparked discussions about the existing tax regime applicable to digital assets in Argentina. According to Marcos Zocaro, an accountant, cryptocurrencies are subject to taxes such as Earnings and Personal Property Tax. He clarified that while individuals are not taxed for simply purchasing digital currencies, profits from the sale are subject to taxation under the Earnings Tax.
Sebastián M. Domínguez, director of SDC Asesores Tributarios, highlighted the importance of taxpayers declaring cryptocurrencies if their assets exceed legally established thresholds. He noted that while there is ongoing debate about whether cryptocurrencies are subject to the Personal Property Tax, tax authorities have considered them taxable since 2022.
Maria Inés Brandt, from the law firm Marval, O’Farrell & Marval, outlined the taxation process for the sale of cryptocurrencies, stating that individuals in Argentina must pay income tax on profits from cryptocurrency sales at a rate of 15%. For companies, profits are taxed at a progressive rate of 25% to 35%, plus an additional 7% for potential dividend distribution.
This shift in policy under President Milei’s administration, known for its libertarian economic approach, signals a move towards a more conservative stance on digital asset regulation and taxation. While Milei has expressed pro-Bitcoin sentiments in the past, his presidency has seen limited public statements on the matter. Nonetheless, this decision to scrap cryptocurrency tax exemptions reflects a broader shift in Argentina’s regulatory approach to digital assets.
