The Mexican authorities suggest treating cryptocurrencies as goods since they consider they should have an income tax. The Spanish-speaking country does not yet have an established tax regime on Bitcoin and other cryptocurrencies.
The Taxpayer Defense Attorney (PRODECON) of Mexico stated cryptocurrencies should have a 20% Income Tax. Through that policy, citizens would have to pay that levy on any transaction with Bitcoin or other cryptocurrencies.
PRODECON argues that operations with those assets should comply with the provisions of article 126 of the Income Tax Law. That postulate of the Law requires users to pay a 20% tax rate on the total amount.
This parameter currently applies to the disposal (sale, transfer, or donation) of assets such as real estate. The buyer must retain the said value, which would be applicable even with no fiat deposit when exchanging cryptocurrencies.
Decentralized public agency PRODECON provides guidance, advice, research, and legal defense in tax matters. As it aims its services at both federal tax authorities and taxpayers, it seeks to regulate the use of cryptocurrencies in Mexico.
The Tax Would Apply to Transactions Above MXN 227 Thousand
Only those conducting transactions of less than MXN 227 thousand, around USD 11 thousand, or purchasers outside of Mexico could be exempted from the tax. In those cases, they should present the documentation that proves it within a maximum of fifteen days after the operations with cryptocurrencies.
Of course, that would only happen if the Income Tax Law declares cryptocurrencies as goods. Currently, no type of tax regime forces anyone to pay taxes for transactions with assets such as Bitcoin.
Several cryptocurrency exchanges like Buenbit and Letsbit have recently arrived in Mexico, which represents exponential growth. Besides, OSL recently announced that Mexicans would be able to trade Bitcoin without fees.
To celebrate the expansion into Latin America, OSL announced that its new customers would not have fee costs until late2021. That measure is a strategy of the company to attract professional and institutional investors making large transactions with cryptocurrencies.
The Securities Commission Reiterates Mexican Banks Cannot Trade Bitcoin
The Securities Commission does not allow banks to trade Bitcoin in Mexico since the state has not recognized cryptocurrencies. For that reason, Mexicans turn to unbanked platforms to buy, sell and store those assets.
The president of Mexico’s National Banking and Securities Commission (CNBV), Juan Pablo Graf, said that cryptocurrencies are well regulated. He also said that there would be no changes in the future.
The FinTech Law of Mexico stated that FinTech platforms, financial intermediaries, and cryptocurrency exchanges must register. They added that they must comply with some regulations and report some operations to the Financial Intelligence Unit (FIU).
The growth of Bitcoin and other cryptocurrencies in the market does not go unnoticed by regulators from many countries. PRODECON considers that crypto assets should have income taxes just like tangible assets in Mexico. It is just a matter of time before the Mexican Income Tax Law declares those assets as goods.
By Alexander Salazar
