Argentina’s central bank has introduced a new tax rule for cryptocurrency exchanges, effective immediately. The 0.6% tax on cryptocurrency transactions affects exchanges that have bank accounts in Argentina.
Argentine authorities have announced a new taxation rule for crypto exchanges, according to an official notice released on November 16.
The taxation is effective immediately and is subject to the government’s cheque tax. This is its tax on credit and debts. As a result, this tax will come from purchases and sales executed on cryptocurrency exchanges.
Up until this declaration, the classification for cryptocurrency transactions was as cash transactions. Therefore, they were exempt from taxation. This new decree taxes them at a rate of 0.6%. However, cryptocurrency transactions have been subject to capital gains tax since 2017.
The notice reads,
“The exemptions provided for in this decree and in other regulations of a similar nature will not be applicable in those cases in which the movements of funds are linked to the purchase, sale, exchange, intermediation and/or any other operation on cryptoassets, cryptocurrencies, digital coins, or similar instruments, in the terms defined by the applicable regulations.”
The users will bear the cost of this new taxation as exchanges are likely to pass the burden onto them. It will only affect crypto exchanges that have an Argentinian bank account.
The new taxation rule will certainly impact the market in the country, especially since citizens have been quite enthusiastic about cryptocurrencies. Peer-to-peer platforms conduct a modest amount of activity.
Argentina likely to regulate cryptocurrency more as citizens flock to market
The President of Argentina’s central bank, Miguel Pesce, has indicated that the country will look more closely at the cryptocurrency market. In a meeting organized in September 2021, he said that the bank would be “closely monitoring” the crypto market.
The introduction of a new tax rule is just one step in what is likely to be a long road to regulation. The upside of this is that the government seems willing to allow the crypto market. Volatility appears to be a major concern. However, Pesce appears to be accommodating of the idea of letting payments take place in cryptocurrencies.
However, more reasonable regulation could attract investors who are more hesitant to enter the market, lacking clear regulation.
Cryptocurrencies are popular in Argentina, which saw a surge in bitcoin buys following the stock market crash in 2019.