Argentinian Tax Agency is Seizing Digital Wallets

The AFIP, which is the tax authority in Argentina, is seizing the digital wallets of taxpayers who have debts. According to numbers, the agency has ramped up its efforts and seized more than 1,200 digital wallets of individuals who had debts to be paid but did not have a bank account, or any other assets that could be used for payment purposes. While the authority to order crypto-related seizures has not been granted to the organization as yet, it is a possibility in the future.

Seizures are rising

These days, tax authorities all over the globe are learning about the different ways that taxpayers conceal their funds in order to avoid their obligations. The AFIP is the tax regulator for Argentina and it has become more proactive in this regard. The institution recently began to seize the digital wallets of people who owe the agency.

These digital wallets are essentially custodial services that are provided to third parties by fintech companies and they do not have a direct relation to banks. This year in February, the AFIP added digital wallets to the list of assets that can be seized from taxpayers in case of failure to pay their tax obligations.

Local media disclosed that since February, the AFIP has managed to conduct 1,269 seizures since then and customers who have digital wallets and owe the organization have not been able to do anything about it.

During the coronavirus pandemic, the AFIP had not carried out any debt collections for a period of 19 months in the country, as the government in Argentina had taken these measures for safeguarding the property of the people during tough times.

The seizure procedure

Even though there are no clear steps that tax authorities follow when it comes to seizing assets from debtors, this kind of seizure usually happens when the debtor in question does not have any other liquid asset that can be used for debt collection. If there are any other properties or assets, or even funds in a bank account, those are the first target of the AFIP.

Thanks to legal requirements, the tax agency in Argentina already has access to the data of all third-party digital wallets. It gives the organization the ability to access the funds without any issues.

Not all wallets

But, it should be noted that it is only possible for the AFIP to seize funds if the digital wallets are issued by a local company and not a foreign one. Therefore, it is not surprising that citizens prefer to hold their money outside of Argentina.

Official estimates indicate that undeclared funds are about $360 billion and a significant portion of them cannot be accessed by the AFIP. But, there is no limit on the assets that the AFIP can seize, which means it is quite possible that crypto assets held on exchanges in the country, or even in custody services, could also be seized. However, no reports have come in about the tax authority doing this as yet.