As crypto has taken global markets by storm, governments have scrambled to roll out tax laws to keep up with the shifting financial landscape.
The first ever sale of Bitcoin took place on December 10th of 2009. And despite hitting public exchanges in 2010, in Argentina, the first proposed tax on crypto will not be decided upon until 2023.
Before 2010, the buying, selling and trading of cryptocurrency was not a matter that international governments had previously confronted.
Since the first sale of Bitcoin, crypto has only continued to gain momentum. In just the course of the past year, the rates of people using crypto have more than tripled. 2022 marked a record year with an average of 320 million unique crypto users across the globe.
In Argentina, where the number of freelancers has grown to be more than 28% of the entire employed population, crypto has taken on an especially important role. For contractors working with global companies, receiving compensation in crypto is not only simpler but more stable than the local currency which has reached an inflation rate 94.8%.
In the wake of crypto exploding as an internationally-traded currency and a preferred payment for the Argentinian workforce, policy makers have raced to develop laws around its taxation.
Paying Contractors in Crypto
Due to the relatively recent introduction of crypto into the gig economy, for contractors and employers alike, understanding how to navigate legal payment is a concern of utmost importance.
Many organizations opting to hold crypto treasuries have chosen to do so due to their vast international networks. Crypto is ideal for paying global employees because payments can be issued close-to instantly, and transaction fees are much lower than those associated with wire transfers or PayPal.
Yet while crypto has proven to be highly convenient in many respects, if managed incorrectly, it can still pose an issue in the face of compliance. The irregularity of tax laws across borders are a main concern for companies issuing crypto payments to their contractors.
While in some countries such as Portugal, there are no taxes put on crypto, in others, you can expect to pay income and/or capital gains taxes.
For organizations that are regularly contracting large numbers of global freelancers, staying compliant with shifting crypto laws can fall between the cracks.
Ensuring Compliance While Paying Contractors in Argentina
While up until the start of 2023 Argentina has existed as a tax haven for the crypto community, a proposed crypto tax law will soon be voted on. This new bill aims at taxing crypto at the same rate as the country-wide capital gains tax of 15%.
If passed, Argentina’s new bill is encouraging citizens to report their crypto holdings within 90 days of it going into effect. For those who report their holdings within this 90-day period, capital gains taxes will be as low as 2.5%. As the 90 days come to a close, taxes will continually increase until they reach the standard rate of 15%, where they will remain therein.
Taxes on crypto mining are also in the process of enforcement in the province of Buenos Aires. A 4% tax on all profits made from mining crypto will be owed to the government of Buenos Aires rather than the national government.
Argentina’s National Securities Commission is working on developing legislation targeting crypto companies operating in Argentina. These policies will have their focus in fraud prevention and anti-money laundering. In these early stages of development, the CNV is working with active members of the crypto community to develop new policies.
With Argentina’s precarious financial situation in the battle against inflation, it appears likely that the proposed crypto bill will come to pass. For the many companies that have relied on the ease of paying out contractors in crypto, it’s time to invest in solutions for ensuring compliance.
Rise Pay and your Organization
Rise is a web3-enabled payment platform that helps you to streamline and scale your global payroll. Through the Rise Pay ecosystem, you can set up automated, instant payments for your international teams in the currency of your choice.
Avoid costly mishaps and let Rise take care of compliance. When you onboard your organization with Rise Pay, regardless of the currency in which you hold your treasury, the country in which you are based, or the location of your contractors, compliance is guaranteed.
For organizations that contract predominantly in crypto, Rise presently supports 100 different cryptocurrencies.
In addition, the Rise ecosystem is compatible with the following wallets:
- Coinbase Wallet
To learn more about how Rise can benefit your organization, schedule a demo today.