Buenos Aires Will Tax Crypto Mining Next Year

Key Points:

• In 2023, the Argentine province of Buenos Aires will start taxing crypto mining and perhaps staking.

• An updated proposal would change the tax code to include cryptocurrency mining as a taxable activity and impose a 4% tax on any revenue derived from such operations. The question of whether staking will be taxed is still open.

The Buenos Aires province in Argentina gave the go-ahead for a plan to include crypto mining as a taxable activity for the upcoming calendar year.

According to a paper submitted by the province’s governor, Alex Kicillof, 4% of the revenue generated by the activity, officially referred to as “Processing and validation services for crypto assets and/or cryptocurrency transactions (crypto asset and/or cryptocurrency mining),” will be required.

Argentine accountant Marcos Zocaro is uncertain about the rate at which the cryptocurrencies that have been mined (or staked) would be taxed.

The document claims that these digital assets will be taxed at their official or current value in place, but it doesn’t specify where these valuations, which differ from exchange to exchange, come from. It’s also not clear if this value will be determined at the time the cryptocurrency is mined or at the end of the tax period.

The taxes would not be connected to any other taxes imposed by the Argentine national government and would be paid to the provincial government. The document clarifies that this tax will only be imposed where the hardware utilized to carry out the activity is situated within the province’s boundaries.

Analysts’ concerns concerning applying this tax mostly revolve around two topics. The first one has to do with how tax-exempt equipment is defined.

Solely ASIC miners and graphics cards will be considered for these taxes if the authorized documents only mention proof-of-work hardware. However, staking might also be subject to taxation if computers operating staking nodes are seen as a component of this hardware.

Buenos Aires declared in April that beginning in 2019, customers would be able to pay taxes using cryptocurrencies. As part of its push for modernization and digitization, the city has a project to deploy a blockchain-based ID system and will host Ethereum nodes in 2023.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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