There is still no specific regime on the activity in Argentina.
The province of Buenos Aires, Argentina, will include Bitcoin mining and other cryptocurrencies as one more category among those that pay the Gross Income Tax. The Executive Power, headed by Governor Axel Kicillof, presented the amendment to the law, which was approved by provincial deputies and senators. It will come into force from January 1, 2023.
The accountant specialist in taxation, Marcos Zocaro, highlighted the most important details of the text.
“According to the approved project, the following are included in the Activity Nomenclature of the gross income tax: Services for the processing and validation of cryptoactive and/or cryptocurrency transactions (‘cryptoactive and/or cryptocurrency mining’) for your own account, collaboratively or under any other modality,” reaching 4%.”
Some passages of the approved project specify when it is applicable, “The tax will apply when the equipment (hardware) used for the development of said activity is located in this jurisdiction.”
More Details of the Project
In the case of mining with Proof of Work (PoW) it can refer to ASICs or graphics cards. However, the text is unclear as to whether computers will also be counted, for example, for those who miner with other consensus algorithms such as Proof of Stake (PoS).
Zocaro referred to this point and the chance that other jurisdictions will go the same way as Buenos Aires:
“The standard talks about hardware for mining, so it is not clear if it refers only to PoW or any consensus mechanism. Surely, as has happened with other regulations, other provinces make a copy-paste of the regulation, without any kind of analysis.”
The law also does not provide clarity regarding the price of cryptocurrencies to calculate the tax rate. The price of cryptoactives changes depending on the exchange that is consulted.
Taxes on Cryptocurrencies
There is still no specific regime regarding the payment of taxes for cryptocurrencies in Argentina. Of course, there are certain taxes that affect the operations of digital assets, and that users must take into account when operating.
Cryptocurrencies were already susceptible to tax impositions; however, the Federal Administration of Public Revenues (AFIP, in Spanish) declared that cryptocurrencies can effectively be considered as a non-traditional financial asset based on the Blockchain.
If a person makes digital transactions and achieves at least one favorable result through the sale, they will have to pay certain taxes.
It is important to point out that those who are reached by the taxes of the AFIP must not pay the Value Added Tax (VAT). According to the Law established on VAT, the tax reaches tangible goods, that is, the sale of movable things, works, rentals, or services.
The commissions that one gets for the sale or purchase of cryptocurrencies are covered by VAT. If a person charges for an operation with digital currency, they must pay the tax.
By Audy Castaneda
