Last March 28, a bill was introduced in the Chamber of Deputies of the Nation that contemplates the creation of a National Fund for the Cancellation of the Debt with the International Monetary Fund (hereinafter, the “Bill”), The “Bill” consists of a special contribution from those individuals or legal entities with assets located or located abroad that have not been duly declared before the Federal Administration of Public Revenues (“AFIP”) and that were detected as from the effective date of the law.
The Bill establishes that the following will be subject to the contribution:
- holding of national or foreign currency;
- real estate;
- personal property, including shares, participation in companies, rights inherent to the character of beneficiary of trusts, all kinds of financial instruments or securities, such as bonds,
- negotiable obligations, certificates of deposit in custody (ADRs), shares of mutual funds and even crypto assets; and other assets abroad, including credits and all kinds of rights susceptible of economic value.
The assets listed above will be valued in accordance with the Personal Property Tax Law as of the date of detection (the AFIP will be responsible for adjusting the valuation criteria in the case of legal entities), and taxpayers must pay a one-time contribution in foreign currency equivalent to the application of a 20% rate on the total amount of undeclared assets.
If the taxpayer complies with a voluntary and spontaneous acknowledgment without prior intervention by AFIP, the taxpayer would have access to certain benefits and exemptions provided by Law No. 27,613 (Construction Laundering Regime), which assimilates the proposed scheme to a regularization or “laundering” regime. This is even more evident with the provisions related to the increase of the rate to 35% when the recognition is made 6 months after the entry into force of the law.
The Bill also establishes a suspicion period of three years immediately prior to the effective date of the law, as from which AFIP may disregard any operation that is presumed to be an evasion scheme or intended to avoid the payment of the contribution, and must include the assets for the purposes of the calculation of the contribution. Within this period of suspicion, the AFIP is also empowered to disregard the change of tax residence of a taxpayer when malicious maneuvers are presumed in order to distort the true place of residence.
Additionally, the Bill provides for the figure of the “collaborator”, granting the possibility for individuals to provide any type of information that facilitates the detection of undeclared assets abroad in exchange for an economic incentive calculated on the total amount of collection.
Finally, it establishes the application of the Criminal Tax Regime in the event of eventual non-compliance, without prejudice to the compliance of all the omitted tax obligations plus interest, accessories and fines. The AFIP and the Financial Information Unit are instructed to request international cooperation with other competent authorities, financial entities and/or stockbrokers, in order to locate undeclared assets abroad.
It should be noted that the Project is subject to modifications and alterations as a result of the parliamentary debate to be held in the Chamber of Deputies and the Chamber of Senators, for which reason what is described in this Newsletter could be substantially modified at a later date.
