The Federal Administration of Public Income or Administración Federal de Ingresos Públicos (AFIP), Argentina’s revenue collection body, is now targeting digital assets owned by tax evaders in the country.
According to a report by iProUP, a local news outlet, AFIP has seized 1,269 digital asset wallets linked to tax delinquents since February 2021 with the backing of courts around the country. This method allowed AFIP to recover over $800 million in maturities accumulated by the delinquent taxpayers during Q1 of this year, the report notes.
The tax regulator disclosed that it identifies the wallets through information shared by virtual assets service providers (VASPs) as required by laws guiding all financial sector entities. The law requires financial entities to maintain verified KYC information, as well as detailed income, expenses, and monthly balance records of users’ accounts.
While it has been gathering data, the AFIP only publicly hinted at plans to go after the digital asset holdings of tax evaders back in May this year. Before, it largely targeted the seizure of bank accounts, liquid assets, or other kinds of assets to cover tax payment discrepancies.
The move is also a resumption of the AFIP’s dogged clampdown on tax evaders which was suspended for 19 months during the COVID-19 pandemic lockdown to alleviate financial pressures on citizens.
Meanwhile, the tax body estimates that Argentines have more than $360 billion of undeclared taxes, with a significant part of this figure in foreign banks and investments outside their jurisdiction.
Digital currency adoption on the rise in Argentina
AFIP’s move comes amidst the backdrop of Argentines flocking to digital assets in their droves. The South American country has been struggling with inflation and the devaluation of its currency—the Argentine peso, leading many to seek alternatives to protect their wealth, according to a recent report by Reuters.
In contrast to the broad adoption of digital currencies by citizens, government agencies have been divided over how to handle the industry. While lawmakers have proposed to make regulations allowing digital currencies to be used in making salary payments, the central bank has warned of the risks that such a move could pose.
Argentina is also under external pressure from the International Monetary Fund (IMF) to discourage digital currency adoption. The IMF placed the conditions on the country as part of its bailout deal.
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