Thursday, December 31, 2015

Tax amnesty scheme won't continue

Economy Minister Alfonso Prat-Gay speaks yesterday at a press conference alongside AFIP tax bureau head Alberto Abad.

By Fermín Koop
Herald Staff

Scheme was a ‘failure’ as it only collected half of the US$5 billion goal, Prat-Gay said

Having collected less than half of what was originally targeted, President Mauricio Macri’s government has ended a tax amnesty programme that began under the President Cristina Fernández de Kirchner administration and was set to expire today. The scheme had been granted nine extensions since it was implemented in May 2013.

Finance Minister Alfonso Prat-Gay and AFIP head Alberto Abad announced that the scheme that created the Cedin certificates and the BAADE bonds will no longer be in force and dismissed speculation that they were getting ready to implement a new programme.

“The programme simply failed. It was far from reaching its initial goals, even though it was extended many times. It allowed people to bring in dollars in cash and not through the financial system and no taxes were charged on those who participated,” Prat-Gay said. “It was unacceptable and against our stated campaign goals.”

The criticism echoed those made by tax experts since the scheme was first implemented, with some praising the tax amnesty carried out in 2009 because it charged taxes according to what was done with the money.

A total US$2.5 billion were collected since the scheme started in 2013 and mainly through the Cedin real estate certificates, Abad said, half the US$5 billion goal CFK had set.

In order to appeal to Argentines who have an estiamted US$400 billion in tax havens, two instruments were created: the Argentine Bond for Energy Development (BAADE) and the Cedin, a certificate of deposit that can be used for real estate transactions.

More than US$500 million in Cedin are still in the market and they will continue to be honoured, Abad said.

A bill dismissed

Despite strong speculation to the contrary, the government staunchly dismissed reports that it was getting ready to carry out a new amnesty.

Abad said there are no bills currently under review, saying that implementing a new scheme would have a high “fiscal cost the state couldn’t afford,” claiming AFIP focus will be instead on improving the tax collection strategies

Shortly after the election, tax experts allied with Let’s Change began circulating a draft of a new tax amnesty law that would resemble the one that was carried out in 2009. The measure was set to reward those who decided to bring their money into the country rather than keep it abroad by offering bigger tax breaks.

The draft said citizens would be allowed not only to legalize undeclared cash but also assets such as real estate, bonds and shares located either in the country or abroad.

Despite Abad dismissal that the issue was even being considered, tax experts close to the AFIP head told the Herald that a new tax amnesty could still be carried out on the second part of the year after more “urgent” issues are dealt with. Trust has to be created for Argentines to bring their undeclared funds back into the country and that takes time, they said.

@ferminkoop