SOUTH AMERICA: Argentina begins analysing 'wealth tax' bill, vote likely early December.

As published on batimes.com.ar, Wednesday 25 November, 2020.

The Senate began analysing of the so-called 'wealth tax' bill to impose a one-off levy on Argentina's richest citizens on Tuesday, following last week's approval of the initiative in the lower house.

If passed, the government-backed bill – which the Alberto Fernández administration hopes will boost the state's coffers by around US$3 billion – will see between 9,000 and 12,000 of Argentina's wealthiest individuals face a progressive one-time levy, or "Extraordinary Solidarity Contribution," on assets worth more than 200 million pesos (roughly US$2.35 million).

On Tuesday, the proposal was discussed by the Senate's Budget and Finance Committee, with AFIP tax agency chief Mercedes Marcó del Pont giving a presentation in favour of the bill. She stressed that the "resources obtained from this contribution will be applied" to problems related to the Covid-19 pandemic, before clarifying that at the current exchange rate, a total of "11,855 people" would face the levy.

"It is more than we had estimated months ago, but it is very much in line with what it had been in the original discussion," she said.

Seven days must elapse after the lower house vote before it can senators can be asked to decide on the initiative, meaning a final decision is likely due in extensions of Congress' normal sessions, or the extraordinary sessions proposed that look set to take place after November 30.

The project, which attracted support and criticism from opposition lawmakers, would establish a progressive rate of up to 3.5 percent for goods located in Argentina, rising to 5.25 percent for assets held outside the country.

The opposition brands the levy "confiscatory" and believes it will face strong legal challengesin the courts. Pro-government lawmakers, in contrast, argue that such levies are in place in many developed nations (favouring a comparison with Germany) and rejects the argument will dampen investment, saying it is "business leaders who are taxed and not companies."

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