Argentina creates free haven for crypto assets

Posted by Lea Hogg Posted: Feb 03, 2024

Argentina, under the leadership of President Javier Milei, a well-known Bitcoin advocate, has recently proposed a ground-breaking bill to Parliament. The “Foundations and Starting Points Law for the Freedom of Argentinians” aims to overhaul the country’s taxation system. Notably, the bill excludes any provisions for cryptocurrencies, effectively eliminating their tax declaration.

Previously, digital asset holders could declare their holdings and benefit from a fixed tax rate: no tax for holdings below $100,000 and a 15 percent tax for those exceeding this amount.

This advantageous tax treatment has now been removed, sparking controversy. Critics argue that this move contradicts Milei’s known support for cryptocurrencies, labelling the tax policy as unfairly biased. Interior Minister Guillermo Francis, who is spearheading the bill, cites political disagreement as the reason behind this controversial decision.

Untaxed ownership and taxed capital gains

If the proposed legislation passes, holding cryptocurrencies in Argentina will not incur taxes.

Accountant Marcos Zocaro explains that tax obligations will arise only from capital gains generated through sales, and that too below a specific threshold. He states, “In the case of an individual, for the simple act of buying what the law calls digital currency, no tax is paid. 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”.

However, international transfers of cryptocurrencies will be subject to a tax rate ranging from 5 to 15 percent, a strategy designed to attract foreign cryptocurrency investments. Despite this significant change, the government continues to actively support the sector. The proposed bill even allows for the declaration of cryptocurrencies without proof of origin.

Foreign Affairs Minister Diana Mondino, (pictured above), reaffirmed that cryptocurrencies will have their place in Argentina under certain conditions. Although the bill has its imperfections, it reflects Milei’s ambition to make Argentina a welcoming land for the crypto ecosystem. This development is a matter to be closely followed in Parliament in the coming weeks.