Monday, March 4, 2024

ECONOMY | 28-03-2022 22:02

Frente de Todos senators eye bill to tax undeclared assets held overseas

Ruling coalition senators propose new bill that would tax the undeclared assets of citizens held overseas and use them to pay off IMF debt.

Senators from Argentina's ruling coalition confirmed Monday that they are pushing a new bill that would tax the undeclared assets of citizens held overseas and use them to create a fund to pay off the country’s US$44.5-billion debt with the International Monetary Fund.

The text of the proposed legislation requires "a contribution of 20 percent of undeclared assets, to be paid in dollars," a statement released by the Frente de Todos bloc in the upper chamber said. 

The ruling coalition does not have a majority in the Senate, which is headed by Vice-President Cristina Fernández de Kirchner.

The rate would rise to 35 percent if a person declares assets abroad six months after the law comes into force. Those who refuse to pay would risk "a prison sentence," according to the bill.

"This contribution will not represent a new tax burden for the majority of Argentines, as only those who have assets abroad, are evading taxes or laundering money will have to pay," the statement said.

The new rule would also apply to those who have changed their tax residence to another country "when their real centre of vital interests continues to be the Argentine Republic," said the ruling coalition.

According to the bill, as of December 31, 2021, an estimated US$417.507 billion was held abroad by Argentines abroad “outside of the institutionalised financial system," of which "only US$69 billion" has been declared to the local tax authorities.

"Those who benefited from IMF resources, fled foreign currency from Argentina [via capital flight] and did not declare them – a deeply harmful act – are the ones who should make the greatest effort and who are ultimately targeted by this bill to repay the debt with the IMF," said the ruling coalition in its statement, describing the policy as “an act of strict distributive, tax and historical justice."

Earlier this month, Argentina sealed a new financing programme with the IMF to restructure the remaining US44.5 billion debt it holds from the record US$57-billion credit-line granted to the Mauricio Macri administration in 2018.

The new deal, which ultimately won the support of Congress, exposed a stark split in the ruling coalition. A number of Kirchnerite lawmakers aligned to Fernández de Kirchner voted against the new agreement with the multilateral lender.

Speaking earlier on Monday, Presidential Spokesperson Gabriela Cerruti said that President Alberto Fernández’s government "values the initiative" of the senators, which would create a "national fund for the cancellation of the debt with the International Monetary Fund."

Later the same evening, Fernández de Kirchner revealed in a post on social media that she had met with US Ambassador to Argentina Marc R. Stanley. She said that talks had addressed “common interests,” including money-laundering.

"I asked him for his country's collaboration with the bill presented today by [Frente de Todos] senators to create a national fund for the cancellation of the debt with the IMF, with resources recovered abroad from laundering and evasion," she added.

Responding to the news, Argentina’s main opposition coalition, Juntos por el Cambio, branded the bill "unviable" and "inapplicable."

Speaking to the Noticias Argentinas news agency, PRO national lawmaker Omar de Marchi said that the government had a “remarkable capacity” to propose “unviable things.”

The Mendoza deputy argued that the bill “implies the creation of another tax" and therefore "should enter through [lower house Chamber of] Deputies and not through the Senate."

Fellow national deputy Pablo Tonelli, who said he had not yet read the bill, described the initiative as “curious” and said he doubted that the state would be able to track down undeclared assets held overseas. 

The head of the Radical bloc in the lower house, Mario Negri, also described the proposal as "inapplicable,” with his critique following the same lines. He dismissed the proposal as “gesture politics” designed to cover up tensions in the ruling coalition.




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