The election of Pro-Bitcoin president Javier Milei in Argentina has been a source of hope for crypto enthusiasts in the country and globally until recently. Under Milei’s leadership, the government has removed some tax privileges that would have allowed taxpayers to declare undisclosed assets like crypto for subsidized tax rates.
Unforeseen Move: Argentina’s Pro-Bitcoin President Scraps Crypto Tax Advantages
The crypto industry went agog following Milei’s election and assumption of office late last year. To many, his ascension to the presidency was everything needed to take cryptocurrency to greater heights in the South American country. However, the recent development around taxes on cryptocurrency has taken the crypto community aback with everyone questioning whether Milei was worth the hype in the first place.
The bill titled “The Law of Bases and Starting Points for the Freedom of Argentines” previously included a clause to allow the declaration of certain assets including cryptocurrency. By declaring their crypto assets, taxpayers would be able to enjoy certain tax discounts.
The now-deleted part of the bill proposed a horizontal tax of 5% on all assets declared within March 2024, 10% for assets declared between April and June, and 15% for those declared between July and September 2024. However, hopes around all such discounts have come crashing following the withdrawal of the clause from the bill.
Before the recent situation, the government allowed cryptocurrency asset owners to declare previously undeclared assets only at a fixed tax. Argentine citizens can declare assets at no tax for the first $100,000 and 15% for the rest. However, the recent change in the bill brings an unfortunate end to these perks.
Unveiling the Positive Side of Argentina’s Tax Advantage Elimination
Beyond the strains that could result from removing the clause allowing crypto tax exception, there seem to be some good intentions to the updated bill. Upon the approval of the bill, merely holding crypto will stay untaxed in the country of Argentina, as per Marcos Zocaro, Argentine public accountant and tax specialist.
“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,” added Zocaro.
The recent changes to the “fiscal honesty” part of the original bill seem to drive toward discouraging money laundering. It will crack down on Individuals or corporate entities who externalize ownership of assets not previously declared to tax authorities from cash to crypto.
After the Executive Branch of the Argentine government scrapped the fiscal aspect of the bill, talks on money laundering and taxation as related to the bill have ceased in Congress till further notice. They will begin to be reconsidered when the government includes bills that pertain to them again.
“…What has happened in the last few hours in Argentina has not only been the elimination of the possibility of “laundering” crypto assets, but also that all types of fiscal reforms were directly eliminated from the bill, including the honesty regime. In its whole.” said Zocaro, reacting to the recent changes in the fiscal chapter of the Omnibus Law.
Argentina is the third most populated country in South America, with up to 12% of the adult population having already invested in crypto. With many more citizens adopting cryptocurrency as a hedge against the high inflation rate in the country, its government’s policies are a big determinant of events in the cryptocurrency terrain.