The Argentinian Tax Authority (AFIP) will now be able to confiscate the assets that taxpayers have in digital wallets if they have debts with the organization. The recommendation for attorneys of this institution to include these digital accounts was made last year, but the execution of debt collection was suspended during the Covid-19 pandemic period. However, these procedures started being executed on January 31.
Argentinian Tax Authority Eyeing Digital Wallets
The AFIP, the Argentinian Tax Authority, has included funds in digital wallets as one of the assets that can be confiscated from taxpayers to settle tax-related debts. This addition was suggested to state attorneys in November, but the confiscation procedures of this kind were suspended until January 31st due to the effects of the Covid-19 pandemic.
The organization has now defined the procedure it needs to follow to confiscate assets in these digital accounts. It adds this to other investment vehicles at its disposal to confiscate, such as bank accounts, loans to third parties, houses, and cars. On the importance of this new addition, official sources told local media that:
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 Argentinian Tax Authority has the relevant data for collection due to different regulatory measures that force financial institutions to give up customer information when required by law. There are 9,800 taxpayers whose digital accounts will be confiscated, according to reports.
Current Procedures and Crypto
This newly approved procedure will allow the institution to confiscate funds from more than 30 digital wallets that handle the national fiat currency in the country, such as Bimo, and Ualá. But the most important target for the Argentinian tax authority is Mercado Pago, the digital wallet of Mercadolibre, a bitcoin-friendly 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 from SDC Tax Advisors told local media that even cryptocurrencies could be confiscated if the custody of these assets depends on an entity based in Argentina. He explained:
The novelty points to the fact that digital wallets are targeted in the procedure due to their growth, but that does not imply that the rest of the assets are not subject to possible embargoes.
What do you think about the Argentinian tax authority confiscating funds from digital wallets to pay tax debts?