Buenos Aires Adds Cryptocurrency Mining as Taxable Activity

The province of Buenos Aires in Argentina has given the green light to a plan to include crypto mining as a taxable activity for the next calendar year. According to a document presented by the governor of the province, Alex Kicillof, 4% of the income generated by these operations will be required for the activity formally called “Services for the processing and validation of crypto assets and/or cryptocurrency transactions (crypto assets and / or cryptocurrency mining)”

In it document, presented by the governor of the province, establishes the “Processing and validation services for crypto assets and/or cryptocurrency transactions. However, it is not yet clear if Crypto Staking will be taxable.

The taxes would be paid to the provincial government, and would not be related to any other tax established by the Argentine national government. The document also clarifies that this tax will be applied only when the equipment used to deploy this activity is located in the jurisdiction of the province.

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This tax regime will begin to be applied in January, but there are still some elements to be defined regarding the implementation of this new tax.

Doubts Remain

The doubts that analysts have about the application of this tax are mainly related to two areas. The first has to do with the definition of the equipment that will be taxed. If the approved documents refer only to proof-of-work hardware, only ASIC miners and graphics cards will be considered for these taxes. However, if the computers running staking nodes are also considered part of this hardware, the staking could also be taxable.

In addition, Marcos Zócaro, an Argentine accountant, has questions on the price at which the mined (or staked) cryptocurrencies will be taxed. The document establishes that these crypto assets will be taxed in “official or current value in place,” but it fails to define the source of these values ​​which vary from exchange to exchange. It is also unclear whether this value will be calculated when the cryptocurrency is mined or when the tax period ends.

In April, Buenos Aires announced that it would allow users to pay taxes with cryptocurrencies this coming year. The city also has a project to use a blockchain identification system and will host Ethereum nodes as part of its digitization and modernization push in 2023.

Bitcoin miners in Argentina are capitalizing on the inefficiencies of the country’s interventionist economy for outsized profits, fueled by memories of currency crashes and fueled by government-subsidized electricity.

The taxes would be paid to the provincial government and would not be related to any other taxes collected by the Argentine national government. According to the newspaper, this tax will only be collected in cases where the equipment used to carry out the operation is within the limits of the province.

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The use of this new tax system will begin in January, but some details of its implementation are still up in the air. This means that cryptocurrency investors or traders in the city will stay away from any cryptocurrency mining to avoid paying taxes.