A package of tax measures aimed at stimulating the Argentine economy has gained the backing of the country's lower house of congress, it has been announced.
Under the law, substantial tax cuts will be offered to individuals who repatriate undeclared offshore funds and businesses that bring employees into the formal labour market. The government will also target tax evaders, encouraging them to sign up for discounted payment plans in a bid to increase tax collection.
Currently, it is estimated that around USD100bn worth of investments are being held outside Argentina. The government is hoping that by reducing the 35% levy on repatriations to somewhere between 1% and 8% they will be able to lure some of these funds back into the economy.
With regard to businesses, the government will waive the tax fines that companies would have previously incurred on bringing workers into formal employment, making it legal for them to formally employ up to ten individuals without having to pay their backlog of unpaid taxes.
Additionally, the country's social security agency ANSES will give these employees the same pension plan as those who have been in formal labour for five years.
However, some criticism has been levelled at the scheme by those who believe that it will become a loophole for money launderers.
This argument was raised by Lower House Deputy, Patricia Bullrich, who pointed out that allowing people the discretion of repatriating funds without explaining their origin could encourage financial crime:
However, the government is adamant that the regime will raise tax collection sufficiently to counter the effects of the economic downturn which is predicted for 2009.
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