Meanwhile, Argentina manages a 15% tax on earnings with cryptocurrencies to encourage investment. Dominican Republic and Spain request taxes of 20% to 90% on profits with cryptocurrencies.
According to a study, Panama and El Salvador are the friendliest countries in Latin America when it comes to collecting taxes on cryptocurrencies. In the ranking, there are other countries in the Caribbean Sea region, which maintain a charge close to 0% in taxes related to cryptocurrencies.
The data was compiled by Coincub, an analysis firm, in its 2023 cryptocurrency tax report, which includes a compilation of the policies of different countries around the world, focused on the collection of cryptocurrency-activity taxes.
El Salvador and Panama Stand Out Among the Most Crypto-Friendly Destinations in the World
In their report, Coincub proposed a classification of six different levels, ranging from countries that do not charge taxes, to those that have banned crypto activities altogether. Among the highly positive countries with no taxes on cryptocurrencies, El Salvador and Panama are among the only countries in Latin America.
Since El Salvador approved the Bitcoin Law and made it a legal tender in the country, it has established tax exemptions for Bitcoin. It has further regulated the issuance of digital assets to cover other cryptocurrencies than Bitcoin. In March 2023, it even consented to the elimination of all taxes on Tech industries in the country, including Bitcoin and cryptocurrencies.
Panama, at present, charges little or no taxes to foreign companies that settle in the country. Therefore, by its current tax policy, taxes on cryptocurrencies do not apply, although in 2022, there were quite a few moves to create a cryptocurrency law in Panama. Already approved by congress, it was vetoed by the Executive, and it is awaiting a decision in the Supreme Court of Justice.
Taxes on Cryptocurrencies in Other Hispanic Countries
The next level, Coincub classify countries with low taxation, less than 19%, as regions with a positive vision towards cryptocurrencies, although not at the level of Panama and El Salvador.
In this group is Argentina, where, according to the report, a 15% tax is handled for profits with cryptocurrencies, to encourage investment and avoid tax evasion.
There is also a mention of Mexico, where if the cryptocurrencies were bought by a company, when selling them, a tax of up to 30% applies. Regarding individuals, depending on the earnings, it can fluctuate between 1.92% up to 35%, with the possibility of being exempt.
Puerto Rico is also worth mentioning, as it allows tax exemptions on cryptocurrency earnings, charging only 4% of annual profits to companies registered in the country.
Hispanic Countries Less Friendly to Taxes on Cryptocurrency Gains
There is yet another group that requests a 20 to 90% tax on profits with cryptocurrencies, the Dominican Republic and Spain. In the former case, they have a 27% tax on cryptocurrency earnings and the system is not very transparent.
Spain is a tricky place for cryptocurrency taxes, although its tax system is quite transparent, and taxes can range from 19% to 26%, depending on earnings.
Finally, the report places Colombia and Cuba in the uncertain tax system group. Their systems appear to be ambivalent, even though the respective governments have increased regulation, requiring large percentages of personal income tax.
By Audy Castaneda