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Cryptocurrency transactions will be subject to CPMF tax in Argentina

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Citizens of Argentina will have to pay an additional tax on cryptocurrencies. According to the El Economista portal, the government approved Decree 796/2021, which stipulates the new charge. As a result, all deposits and withdrawals of cryptocurrencies must pay tax.

It is called “imposed the check”, which has existed since 2001. This tax is levied on any and all financial transactions in the country. Therefore, the tax will mainly affect cryptocurrency exchanges that have regulated operations in the country.

Before the new decree, cryptocurrency companies did not have to pay this tax, which translated into an advantage for both companies and their users. In fact, many Argentines use cryptocurrencies both to protect their purchasing power and to avoid transaction taxes.

Law seeks to “equalize” payment system

According to the government, the decree follows determinations of the Argentine Central Bank, which in October 2020 established a new framework for expanding electronic transfers. In this sense, the law updates the national payment system and established what was called 3.0 transfers.

“The State has the obligation to protect equal tax treatment, in this case for payment service providers (PSP) that fulfill similar functions, such as tax settlement and withholding agents, whether national, provincial or municipal”, states the decree .

In other words, the decree aims to remove the advantage that cryptocurrency exchanges and startups had of not paying the tax. It should be noted that this is not a new tax, but an adaptation to an existing law.

In some ways, this tax is similar to the former CPMF tax, which was levied in Brazil until 2007. The Brazilian tax was also levied on financial transactions. Recently, Economy Minister Paulo Guedes considered the return of this tax as a way to increase government revenue. But given the strong popular rejection and in the National Congress, the proposal did not go ahead.

New tax must harm companies

For many enthusiasts, a transaction tax can benefit cryptocurrencies, as they would serve as an alternative to avoiding paying the tax. However, Argentine law could have the opposite effect and end up harming many companies.

For fintech specialists in Argentina, the law does away with a competitive advantage that the sector has over large banks. Therefore, these institutions will now have more power to create barriers and harm the performance of fintechs.

Even though the tax is not directly charged to exchange users, the platforms may be taxed. Therefore, it is possible that there is some transfer of the fee to the customer, making the purchase of cryptocurrencies more expensive in the country, creating a parallel market in this sector.

In fact, parallel markets are part of everyday life for Argentines who buy the dollar to protect themselves from inflation. The country coexists with the “blue dollar”, considered the “real” exchange rate of the country, whose quotation, according to the website dollar today, is almost double the official currency rate.

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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