• Senate approved the bill which proposes confiscation and other asset forfeiture to those who fail to report foreign or Argentine funds.
• 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. The Argentine government indicated that it wanted to raise regulations on cryptocurrencies and tax them more to boost revenue before the agreement was signed.

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)”.

Also, anyone who has funds in cryptocurrencies, or any digital asset, that are not deposited by crypto platforms based in Argentina, will have to pay this tax.

This tax applies equally to investors in foreign currencies, bonds, real property, shares in investments funds and any other asset that has not been reported.

For Evaders, Discounts and Punishments

The 20% tax due on all assets, not yet registered or declared, will apply if the bill is passed without any changes from the deputies. 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. To pay the debt, the taxpayer would have to sell a portion of his or her funds.

Confiscation Cryptocurrencies to Evaders

The bill CD24/22, Article 13, contemplates total forfeiture of all funds in BTC or other cryptocurrencies by those who refuse pay tax in compliance 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”.

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 up to 30% to facilitate detection and confiscation cryptocurrency accounts.

To The Flipside

• Argentine investors will likely consider storing their cryptocurrencies offline on cold storage platforms after the bill is announced.
• The bill states that platform managers can be sentenced to up to seven years prison for providing false information regarding 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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