Large Argentinian Companies Face Emergency Tax

by Robert Lee, Tax-News.com, London

05 March 2002

The Argentinian President, Eduardo Duhalde announced at the weekend that the Government will be imposing a one-off emergency tax on large firms, in order to raise $A2.33 billion (US$1.2 billion) in aid for the 45% of the country's citizens which now live below the poverty line.

'The...decision taken by the Government is to levy a tax on large companies that took loans in dollars and benefited from their conversion in pesos. And it is just for one time,' the President explained to La Nacion on Sunday.

It is hoped that the cash raised, which will be used to put in place an unemployment insurance system and social programs for the poorest Argentinians, will help stem the tide of protest from the country's citizens, who have been withholding tax payments and rioting over the Government's decision to freeze assets held in bank accounts, and to convert dollar-denominated bank deposits to pesos.

The Government has also announced plans to convert the frozen assets into bonds, two in US dollars and one in pesos, for term deposits of up to 30,000 pesos.

The proposal to tax companies which held more than A$5.83 million (US$53 million) of debt which was subsequently converted to pesos, was taken to Congress by Economy Minister Jorge Remes Lenicov on Monday.

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