In a groundbreaking move aligning with his pro-crypto stance and plans to dismantle the central bank, Argentina’s President Javier Milei has put forth a comprehensive tax reform proposal. Titled “Law of Foundations and Initial Measures for Argentinian Liberty,” the bill, presented to Congress by Interior Minister Guillermo Francis, a close ally of Milei, introduces sweeping changes to the country’s tax structure.
The bill aims to reduce the tax burden on key sectors of the economy, including agriculture, industry, commerce, and services. However, the most contentious aspect of the proposal lies in its deliberate omission of any reference to virtual currencies. This strategic move effectively translates to an exemption for cryptocurrency holders, signaling that they will not be required to declare or pay taxes on their digital assets.
This is a radical departure from the previous tax regime, which allowed crypto holders to declare their holdings and benefit from a fixed tax rate: no tax for holdings below $100,000 and a 15% tax for those above this amount. The removal of this privilege has sparked criticism and discontent among some sectors of society, who accuse Milei of favoring the crypto elite and undermining the fiscal sovereignty of the state.
Crypto Holders Rejoice Over Tax-Free Status
Conversely, the crypto community in Argentina has welcomed the tax reform as an encouraging indication of Milei’s backing for the advancement and growth of the digital economy. As per accountant Marcos Zocaro, specializing in crypto taxation, the legislation will refrain from taxing the possession of virtual currencies, focusing solely on the profits realized from their sale, and only when surpassing a specified threshold.
According to Zocaro’s , when an individual purchases what the law terms as digital currency, they are not subject to any tax. Instead, taxes are levied on the profits gained from the sale, with a minimum threshold below which no taxation applies.
Moreover, the proposed legislation suggests a tax rate ranging from 5 to 15% for international transfers involving virtual currencies, contingent on the amount and destination. This is seen as a way to attract foreign investors and entrepreneurs who are interested in the crypto space, as well as to facilitate cross-border payments and remittances.
Transparency And Regulation Remain Unclear
However, the bill also raises some questions and concerns about the transparency and regulation of the crypto market in Argentina. By eliminating the obligation to declare crypto holdings, the bill opens the door for anonymous and untraceable transactions, which could pose risks for money laundering, tax evasion, and illicit activities.
Moreover, the bill does not provide any clear guidelines or definitions for virtual currencies’ legal status and treatment, leaving room for ambiguity and uncertainty. For instance, it is unclear how the bill will affect the existing regulations and restrictions on purchasing and exchanging foreign currencies, which the previous governments have imposed to control inflation and the peso’s devaluation.
The bill also does not address the issue of consumer protection and dispute resolution, which are essential for ensuring the safety and security of crypto users and investors. Without a proper legal framework and oversight, the crypto market could become vulnerable to fraud, hacking, and manipulation.
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