• Senate approves bill that would allow the seizure of assets and money deposited in Argentine, foreign or other currencies.
• The government will reward platforms that have ratified their clients with some of the money confiscated.
• People who try to evade tax can face upto 7 years in jail and the confiscation of all their 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 cryptocurrency are among the assets that could be taxed, seized or used to 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)”.

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.

To the same extent, tax will also be levied on those with foreign currency investments, bonds, real property, shares of investment funds and any other asset that hasn’t been reported to tax authorities.

For Evaders, Discounts and Punishments

The tax payable on any assets that are not declared or registered will be 20% if the bill passes without amendments by 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.

The amount due could increase by as much as 50% if the taxpayer fails to pay cryptocurrency tax within the timeframe established by law. A payment period of up to 12 month will be available for those who wish to pay.

According to article 12, taxes must be paid in US Dollars and transferred to foreign cryptocurrencies. In order to repay the debt, this would require the taxpayer to sell some of its 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”.

Proponent of the bill is Senator Oscar Parrilli, Frente de Todos’ ruling party. He believes that the existence of digital assets in foreign countries and the failure to declare them to the National Tax Agency can do serious damage 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.

Flipside

• Argentine investors will likely consider storing their cryptocurrencies offline on cold storage platforms after the bill is announced.
• 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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