The Argentine government is considering a proposal that would offer tax discounts to citizens who declare their cryptocurrency holdings.
Boosting Tax Compliance
The aim of this is likely to boost tax compliance and increase revenue for the government by ensuring that taxes on cryptocurrency holdings are paid. The specifics of how this would work would depend on the details of the proposed legislation.The draft law on “Externalization of Argentine Savings” has been proposed in order to combat money laundering. According to a January 6th local news report, this was announced by Minister of Economy Sergio Massa.
The proposed legislation would require individuals who hold cryptocurrency to provide a sworn statement, known as an affidavit, to the government which would identify the location of their holdings. The bill also includes tax incentives as a means to encourage individuals to declare their cryptocurrency holdings to the government.
90-day Incentive Window
As per the bill, individuals who voluntarily disclose their cryptocurrency holdings to the government within 90 days of the law being implemented, would be subject to a 2.5% tax on capital gains of their crypto assets. This rate will increase gradually by 90 days increments until it reaches the standard capital gains tax rate of 15%. The idea behind this gradual increase is to incentivize citizens to declare their assets earlier.
The proposed legislation will be presented for discussion in the next session of the parliament. The bill will be discussed and reviewed by the parliament members before any decision to pass it as a law, where it might be changed or rejected.
According to a report from blockchain data firm Chainalysis, Argentina is ranked 13th in the world in terms of crypto adoption. Emerging markets are considered to be a significant contributor to crypto adoption worldwide, with many individuals in these countries turning to cryptocurrencies as a means of protecting their savings and assets against inflation and other economic challenges.Argentines have been known to adopt cryptocurrency in large numbers due to the high inflation rate in the country. According to statistics, the inflation rate in Argentina reached 72.4% in 2022.
High inflation can make it difficult for people to save and protect their assets, which can lead to citizens looking for alternative forms of savings such as crypto.
Additionally, many people in Argentina are also drawn to crypto because it can be used for cross-border transactions, which can be a more convenient and efficient way to move money internationally compared to traditional methods.
Image Courtesy of Casa Rosada through Cointelegraph