PARTNER EXPERIENCE TAXATION OF CRYPTO ASSETS IN ARGENTINA AND THE SOUTH AMERICAN REGION

Javier Ignacio FUENTES, Tax Manager

www. pgyk.com.ar

Almost a decade has passed since financial operations on cryptocurrency were started. At the same time, its definition, legislation, and tax treatment have only recently been incorporated into different nations’ economic and tax laws.

The complexity of the diverse operations made it difficult to tax such a wide range of activities, particularly those derived from blockchain technology. Nevertheless, cryptocurrency tax study has persisted despite the reasons mentioned above.

This article will discuss the situation of investors on digital currencies as miners consider the crypto generation of assets as a service that should be subject to regular taxpayer laws.

Most nations concur that crypto assets should be subject to income tax. Brazil, Colombia, Peru, Chile, and Argentina are Latin American examples of this novel taxation policy. There is also a consensus that this form of asset should not be subject to consumption taxation (the value-added tax approach).

However, each country has a distinct conceptualization of digital currency. Crypto assets are called virtual assets in Chile and Mexico, intangible assets in Colombia, and movable assets in Peru.

Since 2018, digital investments have been subject to taxation in Argentina, albeit not very precisely due to a lack of accurate definitions. The terminology inaccuracy has resulted in affidavits omitting operations and ownership. The results of operations on crypto assets (including digital currencies) are subject to taxation, with particular consideration when they turn into losses (profits generated by other activities cannot offset them). The standard tax rate is 15%.

Individuals’ holdings of assets (including crypto-assets) as of December 31st each year are subject to taxation under an Argentine law that fails to define crypto-assets more extensively. It was not until early 2022 that the revenue authority determined the status of these assets:

“Cryptocurrencies can be regarded as a new class of non-traditional financial assets based on blockchain technology; they consist of an electronic annotation offering the right to a particular amount of money. They can be classified as securities because they share the common traits securities have. Both are thus considered securities incorporated into a registry of account entries (the blockchain in the case of cryptocurrency). Both assets are also homogeneous and expendable goods in the market.”

This new type of asset is nothing more than another investment and security for the Argentine tax authority.

Cryptocurrencies are a subspecies of crypto assets in the eyes of the tax authority, which submits these operations to the same tax treatment applied to securities.

Recently, a bill for the EXTERIORIZATION OF ARGENTINE SAVINGS has been submitted to the Congress of Argentina; the text includes an obligation to regulate national and international financial assets. This regulation incorporates crypto assets, cryptocurrencies, digital currencies, and any equivalent instruments of economic value, as well as all types of rights in the country and abroad.

In the case of Brazil, the exponential development of these operations pushed the country’s tax authority to impose fiscal regulation on digital operations, imposing a tax on cryptocurrency transactions exceeding USD 6,000.

We consequently observe that the basis for taxing crypto-asset transactions as income tax is being established; the policy puts them in the same category as any other financial transaction comparable to securities. Argentina’s tax authority has consequently set cryptocurrency taxation under the personal property tax figure.