• Senate approves bill that would allow the seizure of assets and money if they fail to report funds deposited in Argentina or other foreign currencies.
• Government will pay a percentage of any money seized to platforms that reject their clients.
• Tax evaders will be punished with up to seven years imprisonment and forfeiture of assets.

The Argentine Senate approved last Thursday the bill that proposes the creation of a “national fund for the cancellation of the debt with the International Monetary Fund” (IMF). Bitcoin, and other crypto-currencies are just a few of the assets that may be subject to taxation or seize for tax evasion.

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” of the country.

Argentina owes the IMF around 44,000 million dollars, which were recently refinanced through an agreement signed with the government of President Alberto Fernández. Prior to the signing of this agreement, signs indicated by the Argentine government that they wanted to improve regulations and tax on cryptocurrencies in order to increase their revenue.

The Crypto Tax is not for everyone

The fund, which would be constituted in US dollars, would force residents in Argentina with accounts inside or outside the country to pay taxes on their “crypto assets and other similar ones” not declared “before the Federal Administration of Public Revenues (AFIP)”.

This means that all persons who have funds in cryptocurrency or other digital assets, which are deposited on crypto platforms operating outside of Argentina must pay the tax.

The tax also applies to foreign-currency, bond, and real estate investments, along with shares in investment funds.

For Evaders, Discounts and Punishments

A bill approved by deputies without any changes will mean that 20% tax is to be charged on all assets, even those not yet registered. But, if the taxpayer decides to pay the tax “spontaneously and voluntarily” in the next six months after the law comes into force, he will receive a discount.

Tax on cryptocurrency could be subject to an additional 50% increase if the taxpayer doesn’t pay within the prescribed time frame. On the other side, people who wish to pay can receive up to 12 month’s payment terms.

According to article 12 of the bill, tax payments should be in US dollars. They must also be charged to foreign cryptocurrencies. In order to repay the debt, this would require the taxpayer to sell some of its funds.

Confiscation to Evaders of Cryptocurrencies

Art 13 of CD 24/22 outlines the confiscation total of BTC and other cryptocurrency funds for anyone refusing to pay the tax.

“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”.

The bill’s proponent, Senator Oscar Parrilli from Frente de Todos, is concerned that digital assets are not declared to the tax authorities in the country and can cause serious harm to the state.

The bill will reward wallet or exchange platforms that collaborate by spying on clients with as much as 30% to facilitate detection and confiscation cryptocurrency accounts.

To The Flipside

• Argentinean investors may be considering storing their cryptocurrencies on platforms that offer cold storage services (offline), to protect themselves from confiscation.
• According to the bill, platform managers could face up to seven years imprisonment if they provide false information to their clients.
• While the collaborator (individual or company) who “in any way disseminates, divulges or discloses information related to the collaboration process”, would also receive up to 2 years in prison.

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