Author: TaxDAO
The Argentine Republic (Spanish: República Argentina), commonly known as Argentina (Spanish: Argentina), is located in the southern part of South America. Relying on rich natural resources, Argentina has long implemented the export of primary The economic model of substitution of products and imported industrial products. In recent years, Argentina's domestic economic situation has been poor and it has long faced hyperinflation. At the end of 2023, its inflation rate was as high as 211.4%, surpassing Venezuela's 193%, making it the country with the fastest currency depreciation in Latin America. Against this background, investing in cryptocurrencies has become a way for most Argentinians to fight inflation. However, the Argentine government generally takes a wait-and-see attitude towards cryptocurrencies, and its crypto tax reform still needs a long process.
1 Argentina’s basic tax system
1.1 Overview of Argentina’s general tax system
Argentina is A federal country consists of three levels of government: central, provincial and municipal governments, and implements a political system with separation of powers. In terms of taxation, the Argentine Ministry of Economy has set up the Federal Administration of Public Revenue (AFIP), which is responsible for domestic taxation and import taxation. It implements two sets of federal and local tax systems. The federal and provincial governments each have relatively independent tax legislation. There is no tax legislation at the provincial level. On the premise that it violates the principles of federal tax legislation, provincial and municipal governments have the right to formulate their own tax laws based on the needs of the objective situation. Argentina’s tax revenue is mainly turnover tax, with value-added tax, consumption tax and customs duties accounting for more than 70% of Argentina’s total tax revenue, while income tax and property tax only account for about 20% of total tax revenue.
1.2 Personal Income Tax
Argentine personal income tax adopts nationality criteria and domicile or permanent residence criteria, individuals with Argentine nationality, and those who have obtained Argentine permanent residents Foreign individuals who have legal status or have legally resided in Argentina for 12 months or more are resident individuals, and the rest are non-resident individuals. Resident individuals are taxed on their worldwide income, with tax rates ranging from 9% to 35%; non-resident individuals are only taxed on their income in Argentina. Different tax rates apply depending on the nature of the income. When determining taxable income, paid personal social security funds, medical insurance, pensions and charitable donations are all deducted from income. Personal income tax is a progressive tax rate, with a maximum rate of 33%.
1.3 Corporate Income Tax
Argentine corporate income tax adopts the standard of registration place. Enterprises with registered residence in Argentina are resident enterprises. Foreign non-resident companies without a registered residence in Argentina are taxed only on their income from Argentina. Legal persons, partnerships and other types of entities established under Argentine law (including sole proprietorships, non-profit civil organizations, foundations, trusts, co-investment funds, etc.) are considered Argentine tax resident entities. Argentine corporate income tax is paid annually. Dividend distributions are no longer taxed. Income tax is a federal tax. Local governments cannot apply for income tax. The tax rate for branches and permanent representative offices of foreign companies in Argentina is 33%. Limited liability partnerships are required to declare income and state the income of each partner as the basis for taxation.
1.4 Value-added tax
Argentina’s value-added tax is similar to China’s and is also an extra-price tax. According to regulations, the sale of goods or provision of services in Argentina, as well as the import of goods or services into Argentina, fall within the scope of VAT, with a basic tax rate of 21%. There are also some industries where special tax rates apply.
The export of goods and services is subject to zero tax rate; the sales of some commodities (such as meat, fresh fruits and vegetables, etc.), economic activities (such as interest obtained from loans provided by Argentine banks), transportation (international Except for transportation), publishing business (sales of newspapers, magazines, brochures and periodicals), health insurance are subject to half-rate VAT; common consumer goods such as milk, bread and medicines are exempt from tax; public utility services, especially natural gas, electricity, Water supply and communication services are subject to value-added tax at a rate of 27%.
1.5 Other taxes
Argentina’s asset tax is 0.5% of the asset value paid annually. If the personal net worth exceeds US$100,000, the portion above US$100,000 must pay a 1% asset tax on December 31 of each year. Stocks, bonds, and time deposits in domestic bank accounts are exempt from this tax.
Argentine commodity tax is a federal tax; it applies to a series of special consumer goods produced and imported by Argentina (cigarettes, alcohol, tires, fuel, jewelry, furs, soft drinks, televisions, tape recorders, cars, tapes, films) etc.) to determine unequal tax rates. Crude oil mining rights fees: A certain amount of mining rights fees and 12% of the provincial mining rights fees (collected in proportion to the oil price) are paid per square kilometer.
2 Argentina’s Crypto-Asset Tax System
2.1 The Current Use of Cryptocurrency in Argentina
Argentina’s Cryptocurrency usage has been on the rise since around 2020, with many people starting to buy Bitcoin and stablecoins. For many Argentines, cryptocurrencies are a way to protect value. According to statistics, at the end of 2021, only 12% of Argentine smartphone users purchased cryptocurrencies, but by April 2022, this number had grown to 51%. In addition, as many as 27% of Argentine consumers claimed to be purchasing cryptocurrencies regularly. According to AMI statistics, 71% of Argentines hold cryptocurrency for investment, 67% to fight inflation, and 46% to gain financial freedom.
The Argentine government has always had a wait-and-see attitude towards cryptocurrencies. Although it does not prohibit the use of cryptocurrencies, it will regulate the industry by implementing regulations on taxation, preventing money laundering and financing of terrorism. Although Argentina’s Financial Information Unit (UIF) denies the status of cryptocurrency as a legal tender, it does not prohibit people from using cryptocurrency. This also reflects Argentina’s relatively neutral wait-and-see attitude towards cryptocurrency.
2.2 Argentina’s crypto tax system
2.2.1 Argentina’s current national crypto tax
In crypto In the early days of the currency’s entry into Argentina, Argentina equated cryptocurrency transactions with cash transactions, and citizens did not bear any tax liability for these transactions. However, Argentina revised its Income Tax Law in 2017. Cryptoasset gains are classified as capital gains and income tax is still payable.
In April 2022, the Argentine Senate approved a new bill that will allow the government to tax citizens’ previously undeclared overseas assets, including currencies, stocks, and cryptocurrencies. If taxpayers voluntarily declare these assets within 6 months of the approval of the law, a 20% tax rate can be applied, and thereafter, the applicable tax rate will increase to 35% to 50%. Following this, Argentina’s Ministry of Economy drafted a bill on January 11, 2023 to encourage Argentines to declare their cryptocurrencies at a preferential tax rate. Specifically, citizens who voluntarily declare their cryptocurrency holdings within 90 days of the law taking effect will only pay a 2.5% tax on cryptocurrency capital gains. The country's standard capital gains tax rate will increase every 90 days until it reaches the standard capital gains rate of 15%. Different from the previous bill, this bill specifically formulates relevant tax incentive policies for cryptocurrencies and extends the scope to all cryptocurrencies owned by Argentine citizens at home and abroad. It can be said that this bill shows that the Argentine government pays more attention to cryptocurrency and hopes to have a more comprehensive grasp of the situation of its citizens holding cryptocurrency, and this may be setting the stage for subsequent cryptocurrency regulatory and tax system reforms. prepare for.
2.2.2 Argentina’s current local crypto tax
In 2021, the provincial legislature of Córdoba, a central province in Argentina, voted to pass a new bill that will impose Crypto brokers and exchange platforms are taxed between 4% and 6.5% on gross income from crypto-related transactions, and individual traders are also obliged to pay the same amount. Individuals or companies that receive crypto assets in exchange for goods or services in the province will be required to pay a 0.25% tax to the provincial tax department. This bill makes Córdoba the first Argentinian province to impose a crypto tax. According to the details of this tax rule, it will be subject to the country’s check tax rules, which means that all cryptocurrency-related transactions, whether purchased or sold through the country’s cryptocurrency exchanges, will be paid 0.6% tax.
Buenos Aires, the capital of Argentina, will begin taxing cryptocurrency mining in January 2023, and may also tax staking in practice. A new proposal passed by the province amends local tax laws to include cryptocurrency mining as a taxable activity and impose a 4% tax on income calculated based on these operations.
3 Prospects for Argentina’s crypto-asset tax system
On the whole, severe inflation has objectively promoted the promotion of cryptocurrency in Argentina. The Argentine government We hope to give full play to the positive role of cryptocurrency and ensure the legal compliance of the entire chain of cryptocurrency-related industries on the basis of reforming the existing cryptocurrency tax laws and regulatory systems. At the same time, although local taxes on cryptocurrencies have not become a mainstream practice in Argentine provinces, following the example of Buenos Aires and considering the rich tax revenue that cryptocurrencies can provide for local taxation, it will be common in Argentine provinces in the future. Establishing local crypto tax regimes is not an impossible scenario.
But, as Rodolfo Andranez, co-founder and president of the Argentinian NGO Bitcoin Argentina, said, more taxation and enforcement measures may "not be a viable solution." Plan" because "cryptocurrencies may be part of the future, something worth embracing rather than alienating." Excessive regulation and taxation in the early stages of cryptocurrency development are not conducive to the localization process of cryptocurrencies.
With the election of Argentina’s new President Javier Milei, Argentina’s crypto tax system is expected to be further refined and improved, and may become more friendly and relaxed. Javier Milei is called Argentina's "political madman" by some political commentators. He vigorously promotes liberal economic policies and advocates full trust in the power of the market and avoidance of government administrative intervention. In terms of cryptocurrencies, he sees Bitcoin as a "key tool to combat the inefficiencies and corruption of centralized financial systems" and "a viable alternative to traditional economic structures." Therefore, Javier Milei's administration will have an impact on Bitcoin prices and related tax regimes. It will have a positive impact and may greatly promote the reform of relevant regulatory and tax systems. Of course, Argentina’s economic and political landscape has continued to be unstable for many years, and the specific reform of the encryption tax system remains to be further observed.
References
[1] Adebayo, O. (2021, November 18). Crypto transactions : Argentina releases decree to tax crypto. Cryptopolitan. https://www.cryptopolitan.com/crypto-transactions-argentina-decree-to-tax/
[2] Attlee D. (2023, December 28). Argentines will have a chance to "legalize" undeclared cryptocurrencies. Cointelegraph. https:// cn.cointelegraph.com/news/argentines-chance-regularise-undeclared-crypto
[3] Argentina proposes bill to encourage citizens to disclose crypto assets with preferential tax rates_Tencent News. https://new.qq.com/rain/a/20230111A03U5L00
[4] Kuaishuibao. [Interpretation] Argentine Taxation. Weixin Official Accounts Platform. https://mp.weixin.qq.com/s /FDKgrmVBrAjxEpswJOInXw
[5] Take stock of which countries around the world have implemented crypto taxation? _Currency. Mutual Alliance Data Center. https://www.sohu.com/a/502846927_589332
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