Argentina’s Milei Administration Retracts Crypto Tax Provisions in Sweeping Reform Bill
Argentina’s President, Javier Milei, has decided to exclude proposed cryptocurrency taxes from the comprehensive omnibus reform bill titled “Law of Bases and Starting Points for the Freedom of Argentines.” The decision to remove the clause related to asset regularization, including cryptocurrencies, is part of a strategic move to streamline the approval process for the extensive set of reforms and avoid prolonged debates on less critical matters.
Initially, the omnibus bill, colloquially known as “Ley Ómnibus,” included provisions mandating taxpayers to declare ownership of previously undisclosed assets, encompassing cryptocurrencies. The asset regularization scheme proposed a progressive tax rate structure, with a 5% tax rate for declarations by March 2024, 10% from April to June 2024, and 15% from July to September 2024.
However, Interior Minister Guillermo Francos explained that the decision to remove the tax-related provisions was driven by the need for rapid economic development and legislative efficiency. He emphasized that the tax aspect was relatively smaller and could potentially delay the treatment of more critical components of the bill.
The removal of cryptocurrency tax provisions introduces nuances to the regulatory landscape for crypto holders in Argentina. While holding cryptocurrencies does not incur immediate tax obligations, profits from selling digital assets are subject to taxation. The Argentine Tax Authority (AFIP) classifies cryptocurrencies as financial assets, and the tax percentage varies based on the location of the assets, with the tax base determined by the market value as of December 31 each year.
The Ley Ómnibus aims for extensive economic, social, and administrative reforms, seeking to foster economic development and freedom. However, the bill’s broad scope has sparked considerable discourse and opposition due to its radical proposals across various sectors, raising concerns about potential compromises to Argentina’s democratic framework cultivated over the past four decades.
President Milei’s party holds a minority in Congress, indicating likely resistance to the bill, which must be decided by February 15. The removal of contentious elements, such as cryptocurrency taxes, reflects a willingness to compromise and gain consensus on more agreeable aspects of the omnibus bill. Critics argue that the bill’s scope and radical changes could compromise democratic institutions and essential services.
