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Argentina Approves Tax-Amnesty Law

Mike Godfrey, New York

07 June 2013

Argentina's Congress passed a law on May 29, 2013 which offers an amnesty to tax evaders if they invest their undeclared funds in construction projects or bonds to finance state-run oil company YPF SA.

Many affluent individuals in Argentina have sought to shield their wealth from rapid Peso depreciation by purchasing US dollars, and the introduction of stringent capital controls to buoy the nation's currency has fostered a significant gray market for US dollars in Argentina, with the currency trading for double official exchange rates.

Earlier in May it was reported that the Argentinean government, in an attempt to tackle illegitimate hoarding of US dollars, will not prosecute those who declare dollar deposits, whether held in Argentina or abroad, if they trade them for government-issued certificates of deposits or bonds, which will pay 4 percent interest through 2017.

President Cristina Fernandez de Kirchner needs funds to finance YPF SA, which the country expropriated a year ago in order to expand the country's oil output and reduce its dependence on imports. It is hoped that the new legislation will bring in USD5bn of investment, according to FPV Congressman and former Deputy Economy Minister Roberto Feletti. However, critics argue that the amnesty provides an opportunity for criminals to launder money.

TAGS: individuals | tax | interest | law | legislation | construction | currency | trade | Argentina

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