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Paraguay senators passed crypto taxes and regulations bill

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Indrani bose Follow

INDIA

Jul, 21 2022

Jul, 21 2022

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A bill providing taxes and a regulatory framework for companies involved in the crypto trading services and crypto mining sectors was approved by the Senators in Paraguay.

One of the provisions is to propose the launch of the Ministry of Business and Commerce (MIC). This ministry will have the primary task to regulate service providers of the cryptocurrency industry. As this bill has passed the Senate, it moves closer to being signed into law by Paraguayan President Mario Abdo Benitez.

The legislation was proposed by Senator Fernando Silva Facetti last July and approved by Congress in May before moving on to the Senate. The bill explicitly relates to crypto mining, commercialization, intermediation, exchange, transfer, custody, and/or administration of crypto assets or instruments that enable control over crypto assets, according to a notice from Paraguayan Congress in May.

Crypto taxation is the major provision of this bill. According to local news source ABC, businesses involved in the cryptocurrency sector will be taxed similarly to those who deal with securities. The Undersecretary of State for Taxation will therefore exempt them from paying value-added tax (VAT), but they will still be subject to the income tax system.

The bill also takes into account how crypto miners should deal with regional power providers. The National Power Administration (ANDE), Paraguay's national electricity administration, need to know the energy consumption schedule of any prospective mining operations. ANDE has the right to stop providing electricity to miners if it is discovered that they are using more than anticipated. Although the plan calls for subsidies for miners' energy expenditures, they will still have to pay a rate.15% higher than other industries.

This advances the adoption and regulation of cryptocurrencies in Paraguay, making it the most recent LATAM country to do so. In 2021, El Salvador made Bitcoin (BTC) a legal tender, while countries in Brazil, Argentina, and Panama are all developing their own cryptocurrency laws.

Bill is not supported by all :

Senators pointed out the risks associated with cryptocurrencies, which prevented the bill from passing unanimously. Senator Enrique Bacchetta, one of the bill's opponents, allegedly said that while regulating the cryptocurrency industry might increase profits, he doubted whether it would ultimately result in more jobs for his fellow people. Senator Baccetta's worries were supported by Senator Esperanza Martinez, who highlighted that the energy consumption rate of miners  was much higher compared to the number of employees they would generate.


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Indrani bose

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