New research has highlighted a patchwork of laws, confused regulations and unusual concepts governing crypto taxation in Latin America.
Research from Latin American crypto exchange Buda has highlighted a patchwork of laws, confused regulations and unusual concepts governing crypto taxation in the region.
Buda has provided a series of tax guidelines outlining measures crypto traders should take into consideration when looking to comply with the authorities in Chile, Colombia, Peru, and Argentina.
In various countries in the region, there are different interpretations and concepts regarding what type of good or asset is considered to be a cryptocurrency.
Legal definitions in Latin America
Chile, for example, considers any crypto as “a digital or virtual asset”; Colombia as an “immaterial good”; Peru as a “movable asset,” while in Argentina, there is no official definition at the moment.
The guide highlights many doubts concerning when taxes should be paid for owning cryptos or trading them.
In Peru, the authorities expect that people pay taxes on crypto when they receive payments in cryptocurrencies as a product of the recipient’s profession.
When should people pay taxes?
For Chile and Colombia, a concept called “alienate” is used, which basically means selling. The term is generally understood as being when the person no longer owns the crypto, whether they have sold, swapped, or carried out any other business with it.
Therefore, for both countries, people must pay taxes when they sell crypto.
Due to the lack of official definition by the Argentine government towards crypto, there are also no guidelines on when Argentines can pay taxes on crypto.
In the countries mentioned, local or foreign crypto exchanges are not the ones in charge of taxing on behalf of the client, since it is the responsibility of each taxpayer to declare their obligations to the local authorities.
The legal status of crypto across the region
Cointelegraph Spanish detailed at the beginning of 2020 the legal status of cryptocurrencies in various countries in Latin America.
In the case of Bolivia, for example, it is illegal to use Bitcoins or any other crypto for any transaction, since it is “a currency that is not issued and controlled by a government or authorized entity.”
Ecuador is another country in the region that banned digital assets in mid-2014. However, the laws in Ecuador do not appear to be strictly enforced towards crypto, so there are still Ecuadorians who are actively trading with Bitcoins.