Payments using cryptocurrency to government agencies and institutions are gaining traction as more authorities embrace digital assets. As the financial sector evolves, governments are pushing to modernize their payment systems.
Through the adoption of blockchain technology, institutions can start accepting payments for tax in cryptocurrencies.
The latest to join the crypto payment frenzy is the province of Mendoza in Argentina. The tax authorities of the region have begun accepting crypto payments for tax via a third-party agreement.
Mendoza Embraces Crypto for Tax Collection
One of the first districts in the South American nation of Argentina to go digital in tax payment is Mendoza. The province has adopted a digital payment system to allow taxpayers to process payments using digital tokens.
The service, which went live on August 24, is one of the many initiatives by the region’s authorities to streamline the payment of taxes and state levies. This would provide individuals with multiple options for meeting their civic duties.
According to the general director of the Mendoza tax authority, Nicolas Chavez, this is another way to ease tax payments. Chavez added that it incorporated the services offered by the provider to allow virtual wallets and cryptocurrencies.
However, the payment is integrated into the province’s official but will be processed by a third-party company. The platform will accept crypto payments and convert them into Pesos for the authorities.
In addition, the platform only accepts payments in stablecoins such as USDT, USDC, and DAI. As a result, the system keeps volatility out of its processes. Stablecoins seem to have more stability than other crypto tokens, hence the name.
Initiatives Like This
Other local administrations in Argentina and Latin America have also announced the acceptance of cryptocurrency as a form of tax payment. In April, Horacio Larreta, the Mayor of Buenos Aires, revealed that the municipality planned to implement crypto for tax collection.
Larreta further indicated that the province might deploy this application case with a blockchain-based identity system in 2023.
In another development, one of Brazil’s largest cities, Rio de Janeiro, has adopted a similar policy. Due to the popularity of crypto assets, the city has included it as a tax payment option for next year.
However, Rio’s ambitions go even farther, picturing digital asset payments for other things like taxi rides. In addition, it also intends to use NFTs to foster art, culture, and tourism. Furthermore, it plans to invest a portion of the city’s budget in cryptocurrency through a new entity called the Municipal Committee for Crypto Investments.
Unlike other regions, Latin America has a high crypto adoption rate. As positive as the news is, underlying issues support the increased use of digital assets in the Americas.
The presence of a large number of unbanked adults, high inflation rates, and political instability have played a part. This has opened up a huge opportunity for crypto transactions to thrive, and countries can leverage it to close the gap in financial inclusion.
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