Argentina launches 'Fiscal Innocence' project to formalize undeclared cash

Argentina's Economy Minister Luis Caputo has unveiled a new initiative called "Fiscal Innocence," designed to bring "mattress dollars", cash savings held outside the formal banking system, into the financial sphere. The government plans to send a bill to Congress that modifies the existing simplified sworn income tax regime. This updated project aims to incentivize the "bancarization" of these undeclared funds by removing previous limitations.

Unlike previous iterations, the new law will eliminate the caps of 10 billion pesos in assets and 1 billion pesos in annual income that previously restricted access to the regime. The sole requirements will be having fiscal residency in Argentina and not being classified as a "National Grand Taxpayer." The changes are expected to benefit both individual taxpayers and public officials, past and present.

The core of the scheme is a "fiscal plug," which prevents the Tax and Customs Revenue Agency (ARCA) from questioning the origin of funds declared under the program's conditions. The project also softens the definition of "significant discrepancy", the gap between declared income and what tax authorities detect, and shifts the burden of proof to ARCA. Furthermore, it clarifies that cash payments in real estate transactions will be compatible with the regime, addressing a point of contention for notaries and developers.

Caputo advocated for the initiative as a tool to "formalize the economy" and unlock credit. He argued that holding dollars "under the mattress" is a poor financial strategy, citing that $100,000 saved 20 years ago would have grown to $320,000 if invested at a 6% annual rate. Central Bank data suggests approximately $170 billion in cash savings are held domestically.

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For people, having dollars under the mattress is a very bad business.