Argentina’s tax authority may confiscate digital wallets to collect tax debts
The Argentine Tax Authority (AFIP) will now be able to confiscate assets that taxpayers have in digital wallets if they have debts to the organization. The recommendation to the lawyers of this institution to include these digital accounts was made last year, but the execution of debt collection was suspended during the period of the Covid-19 pandemic. However, these procedures began to be performed on January 31.
Argentina’s tax authority eyeing digital wallets
AFIP, Argentina’s tax authority, has included funds in digital wallets as one of the assets that can be confiscated from taxpayers to settle tax debts. The addition was offered to state prosecutors in November, but such forfeiture proceedings have been suspended until Jan. 31 due to the effects of the Covid-19 pandemic.
The organization has now laid out the procedure for confiscating the assets of these digital accounts. He adds this to other investment vehicles at his disposal to confiscate, such as bank accounts, third-party loans, homes and cars. On the significance of this new addition, official sources told local media that:
The development of electronic means of payment and their generalization explain the choice of the agency to include digital accounts in the list of seizable assets to recover debts.
The Argentine tax authority has the relevant data for collection due to different regulatory measures that require financial institutions to disclose customer information when required by law. There are 9,800 taxpayers whose digital accounts will be confiscated, according to reports.
Current and Crypto Procedures
This newly approved procedure will allow the institution to confiscate the funds of more than 30 digital wallets that manage the national fiat currency in the country, such as Bimo and Ualá. But the biggest target for Argentina’s tax authorities is Mercado Pago, the digital wallet of Mercadolibre, a bitcoin-enabled retail unicorn that allows debtors to store their savings away from tax authorities.
Digital wallets will not be the first target when collecting tax debt. First, the organization will pursue the confiscation of more liquid alternatives. Only when these funds are not available will the organization pursue other assets.
Sebastián Domínguez of SDC Tax Advisors told local media that even cryptocurrencies could be confiscated if custody of those assets is with an Argentina-based entity. He explained:
The novelty highlights the fact that digital wallets are targeted in the procedure due to their growth, but this does not imply that the rest of the assets are not subject to possible embargoes.
What do you think of the Argentinian tax authorities’ confiscation of funds from digital wallets to pay tax debts?
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