06/12/22

SOUTH AMERICA: Argentina targets $100 bln in offshore savings with U.S. tax deal.

As published on reuters.com, Monday 5 December, 2022.

Argentina's cash-strapped government will target some $100 billion in savings held in U.S. bank accounts, in an effort to tax the undeclared funds while boosting central bank reserves, part of a tax deal inked with the United States on Monday.

The effort is part of a financial information exchange agreement that will allow Buenos Aires and Washington to automatically receive data on bank accounts held by their citizens in both countries.

Argentina's tax agency, AFIP, has estimated that Argentines are holding around $100 billion outside the country, in large part to protect their savings from a depreciating peso currency.

Economy Minister Sergio Massa and U.S. Ambassador to Argentina Marc Stanley formally signed the tax deal at an event in the Argentine capital.

"We aren't looking to persecute anyone. We're looking for something much simpler, that the Argentine who pays his or her taxes, who complies with his or her obligations... is not cheated by those who find ways to avoid them through tax havens," said Massa.

Argentina's powerful economic chief described the deal as "an act of strict tax justice" that will strengthen mutual trust and cooperation.

Argentina hopes to tax the undeclared savings in order to strengthen the central bank's scarce foreign reserves, needed to pay massive debt obligations, as well as stimulate investment at home that can boost an economy suffering sky-high inflation.

Separately, Massa also urged Congress to approve a bill that the government will put forward to establish a money laundering regime so that hidden accounts can be exposed.

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