Uncovering Crypto: Essential Knowledge for Latin American Tax Authorities on Hidden Economies
Latin America continues to face one of the largest and most persistent tax gaps in the world, with uncollected taxes averaging more than 6% of GDP. According to the Economic Commission for Latin America and the Caribbean (ECLAC), regional tax collection fell to just 21.3% of GDP in 2023—far below the OECD average of 33.9%. This difference represents tens of billions of dollars in missing revenue that governments need to fund critical public services such as healthcare, education, infrastructure, and social protection programs.
The challenge is magnified by the hidden economy, also known as the shadow economy, which includes economic activities that are happening outside of the tax and regulatory system. These activities are either not reported correctly, or not reported at all, and are often deliberately concealed to avoid taxes, regulations, or other official oversight. In emerging markets such as crypto trading, activities may not be reported simply because taxpayers don’t understand if, when, or how to report them. These emerging markets present a challenge to tax authorities, as the income is often invisible to traditional tax collection methods. But there’s good news: advances in Open-Source Intelligence (OSINT) and IVIX’s innovative intelligence platform provides Latin American tax authorities with new tools to uncover hidden income, deter noncompliance, and recover lost revenue.
How OSINT Helps Tax Authorities Illuminate Shadow Economies
OSINT is the practice of collecting and analyzing information that is publicly and legally available to provide actionable intelligence. How does this help tax authorities? While traditional tax audits rely heavily on self-reporting and voluntary compliance, IVIX takes a different approach, using OSINT to pinpoint and map undeclared business activity across the digital landscape. By analyzing public information from online forums, marketplaces, and blockchain data, IVIX enables authorities to answer three critical questions:
- Who is behind the activity?
- Where is the activity and entity?
- How much is being earned?
Through AI-driven pattern recognition, IVIX transforms scattered digital traces into actionable intelligence, delivering audit-ready investigative leads to tax authorities. These leads help tax authorities streamline workflows, reduce false positives and focus resources on high-impact cases, without the need to expand staff.
Combating the Shadow Economy in Crypto Assets
Crypto adoption in Latin America is among the highest in the world, fueled by currency volatility, remittances, and alternative investments. Yet, this rapid growth brings new tax risks. Many crypto users operate outside the radar of traditional oversight, creating a fast-expanding tax gap.
The IVIX Crypto Tax Compliance Solution is built specifically to help tax auditors overcome this complexity. It provides a powerful analytics platform that:
- Identifies crypto wallet owners.
- Unifies multiple wallets belonging to the same individual into a single profile.
- Tracks and classifies transactions, including buys, sales, self-transfers, royalties, mints, and more.
- Converts all transaction values to the respective country's fiat currency, automatically, based on the transaction date.
- Calculates capital gains using accepted methods like FIFO and Specific Identification.
Global Impact: IVIX is already helping tax authorities worldwide uncover NFT creators and crypto traders who never reported capital gains, resulting in millions in recovered tax revenue.
The Impact of Closing the Tax Gap
The stakes are more than financial. According to Oxfam (2025), in Colombia the wealthiest 1% contribute less proportionally in taxes than the poorest 50%, undermining fairness and the redistributive role of the tax system. By improving compliance in emerging sectors like crypto, tax authorities can:
- Increase fiscal capacity without raising tax rates.
- Strengthen fairness and public trust in tax systems.
- Expand impact against financial crimes, including money laundering and cross-border tax evasion.
- Deter future noncompliance by raising the perceived risk of detection.
A New Era for Tax Compliance in Latin America
Latin America’s tax gap—more than 12 percentage points below the OECD average—is too large to ignore. But thanks to innovations in OSINT and AI, IVIX is helping tax authorities discover, quantify, and recover hidden income in ways that were impossible just a few years ago.
IVIX gives governments full visibility into the hidden economy, transforming the digital age from a compliance risk into a fiscal opportunity. As crypto adoption accelerates across Latin America, addressing the crypto tax gap will be one of the most urgent and impactful steps tax administrations can take to strengthen state capacity and economic equity.
If you are a tax authority in Latin America ready to modernize compliance and gain visibility into the hidden crypto economy, connect with IVIX experts today for a quick introduction.
Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. For guidance specific to your situation, please consult a qualified tax professional.
Willie Rondon is Former Director of International Field Operations for Latin America at IRS Criminal Investigation. With more than 22 years of experience, he is an industry expert in combating financial crime, especially the investigation of white-collar crimes and offshore banking, as well as the role of crypto assets in financial crime.
