The Argentine Tax Authority (AFIP) has already discovered discrepancies when comparing information from tax returns and the crypto holdings of numerous taxpayers with reports from local exchanges. 3,997 citizens of Argentina have reportedly already received letters from the organisation about these issues, giving them the chance to update their tax returns to reflect their crypto holdings and pay additional taxes.
Any taxpayer who used local cryptocurrency exchanges and was required by law to provide the AFIP with information about their business operations. They would be linked to statements that were filed during 2020. The alerts detail how the taxpayer has used cryptocurrencies to transact business on various exchanges.
“You are reminded that the results derived from the disposal of digital currencies are covered by the Income Tax and, if applicable, you must proceed to externalize them in the relevant affidavits as well as their possession.”
Asking people for data and an explanation of their costs and crypto transactions in 2020 might compel them to provide a timeline of their holdings going back to the year of purchase. This may result from the need to revise crypto disclosures for years prior to 2020.
These efforts may result in the confiscation of bitcoin, which analysts say is still a disputed matter. According to Argentine lawyer Daniel Perez, there are still no regulations that permit the government to seize custody of these bitcoin wallets. Digital accounts, however, may be taken over, and the group has done so in more than 1,200 cases since February.
To explicitly state the likelihood of seizing electronic wallets, the legislation would need to be updated. The AFIP is aware of this and is seeking to slip an article giving it the authority to do so with regard to both fiat currency and bitcoin into the budget.
This new provision would only apply to crypto stored in noncustodial wallet providers and exchanges, which would further restrict its relevance. The state’s ability to have citizens hand over their private cryptocurrency keys to authorities is currently unknown.
Argentina’s government has seen a rapid increase in cryptocurrency users as their currency remains unstable. Due to the uncertainty of their national fiat, people in many countries have started turning their heads towards cryptocurrencies. The AFIP seized 1,269 accounts of clients who held funds in foreign crypto wallets and did not declare them in their tax returns.