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Crypto transactions will now be taxed in the Argentinian province of Cordoba. A new bill that seeks to introduce new taxes on gross incomes from cryptocurrency transactions has recently gained approval from Cordoba’s provincial legislature.
Cordoba’s provincial legislature has approved the “Tax Law 2021” which seeks to impose between 4 percent to 6.5 percent tax on gross incomes derived from crypto-related transactions, Bitcoin.com reported. In addition, businesses and individuals who accept cryptocurrencies as payment “in exchange for goods or services” will be subject to a 0.25 percent tax.
With the new law in place, Cordoba becomes the first province in the country to adopt such a taxation scheme but many in the industry believe that other provinces are set to follow soon. According to BakerMakenzie.com, the province taxation overlaps with the federal taxation on cryptocurrencies that imposed income tax since 2017.
Cordoba Bitcoin, a local crypto community, clarified that the previous 15 percent tax only applied to earnings, which is a result of cryptos’ difference in price in the year. To keep track of market activity, exchanges are required to inform the Central Bank of Argentina of any crypto-related transactions.
The new law also introduced a clearer definition of what a cryptocurrency is. “A digital representation of value that can be subject to digital commerce and whose functions — direct and/or indirect — are to constitute a means of exchange and/or a unit of account and/or a store of value,” the approved bill said.
However, there are concerns that the new crypto tax regulation might negatively impact the industry. “Increasing the tax burden can be dangerous because not only will it scare away investments in the sector, but it will also keep many cryptocurrency operations informal,” tax consultant Marcos Zocaro said.
The tax consultant also commented on the tax law’s ambiguous definition for Bitcoin and stablecoins, which is a source of concern as well. “They [cryptos] are put in the same condition against the tax, for example, bitcoin, stablecoins, and security tokens. Is bitcoin (which doesn’t have an underlying asset) the same as a dollar-backed stablecoin? Clearly not,” Zocaro pointed out.
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