The Argentinian province of Mendoza’s tax authority announces that it will allow the payment of taxes through cryptocurrency. Mendoza is home to over 2 million people, making it the fifth largest territory in the South American country.
Instructions given by the province’s government reveal that taxpayers can pay with any crypto wallet. These include Binance, Bitso, Buenbit, Bybit, Ripio, and Lemon. Mendoza will only allow payment in ‘stablecoins,’ which are cryptocurrencies whose value is pegged to the price of another asset such as the US dollar.
“This new service is part of the strategic objective of modernization and innovation carried out by the Mendoza Tax Administration for the purpose of providing taxpayers with different means to meet their tax obligations,” the government said in a statement. Payments received will be converted to the Argentine pesos through an undisclosed payment service provider, it added.
This follows on from the nation’s capital, Buenos Aires, announcing a similar policy though a launch date has yet to be announced. In neighbouring Brazil, the city of Rio de Janeiro in March announced that it will accept municipal real estate taxes to be paid through crypto starting in 2023.
All of this helps make Latin America among the planet’s most crypto-friendly regions. Venezuela, which has seen major economic problems in recent years, has filled some of the gaps with crypto. With hyperinflation and US sanctions greatly impacting its economy, crypto is emerging as a way to provide services that would be handled by the traditional banking system.
“It has become a tool to send remittances, protect wages from inflation and help businesses manage cash flow in a quickly depreciating currency, according to interviews with crypto users and experts,” Reuters reported.
El Salvador made history last year as the central American country became the first on the planet to adopt bitcoin as legal tender. This allows the cryptocurrency to be used for any transaction, from buying a cup of coffee to paying taxes.
Latin America has among the largest number of crypto users worldwide. Brazil, Colombia, Argentina, Mexico, and Chile are among the countries with the top ten crypto users. Turkey holds the top spot as 20% of respondents use it while Brazil and Colombia jointly share second place with 18%. This is followed by Argentina (16%), Mexico (12%) and Chile (11%).
The reasons for this include economic instability as well as an ‘unbanked’ population. The World Bank Organisation estimates that at least half of the Latin American populace has no access to a bank account, leaving them with little ability to safely protect their money. However, far more people have access to an internet connection, making it easier to reach out to crypto than open a bank account. Finally, many countries in the region boast much younger populations who are more likely to use modern technology.
Image: Cary Bass-Deschenes