The Argentine Tax Authority (AFIP) will now be able to seize taxpayers’ assets in digital wallets if they owe the organization money. The recommendation for this institution’s attorneys to include these digital accounts was made last year, but debt collection execution was halted during the Covid-19 pandemic period. These procedures, however, began to be carried out on January 31.
The Argentine Tax Authority Is Interested in Digital Wallets
The Argentine Tax Authority, the AFIP, has listed funds in digital wallets as one of the assets that can be confiscated from taxpayers in order to settle tax-related debts. This addition was suggested to state attorneys in November, but due to the effects of the Covid-19 pandemic, confiscation procedures of this type were suspended until January 31st.
The organization has now defined the procedure that must be followed in order to seize assets in these digital accounts. It adds this to the list of investment vehicles it can seize, which includes bank accounts, third-party loans, houses, and cars. Official sources told local media about the significance of this new addition, saying:
“The development of electronic means of payment and their widespread use explains the agency’s decision to include digital accounts in the list of assets that can be seized to collect debts.”
The Argentine Tax Authority has the relevant data for collection as a result of various regulatory measures requiring financial institutions to provide customer information when required by law. According to reports, 9,800 taxpayers’ digital accounts will be confiscated.
Cryptography and Current Procedures
This newly approved procedure will allow the institution to seize funds from more than 30 digital wallets that handle the country’s national fiat currency, including Bimo and Ualá. The most important target for the Argentinian tax authorities, however, is Mercado Pago, the digital wallet of Mercadolibre, a bitcoin-friendly retail unicorn that allows debtors to keep their savings away from tax authorities.
When it comes to collecting tax debt, digital wallets will not be the first target. First, the organization will seek to seize more liquid alternatives. Only if these funds are no longer available will the organization look for other assets.
According to Sebastián Domnguez of SDC Tax Advisors, cryptocurrencies could be confiscated if the custody of these assets is dependent on an entity based in Argentina. He explained that the novelty refers to the fact that digital wallets are being targeted in the procedure due to their growth, but this does not mean that the remaining assets are not subject to potential embargoes.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.