Argentina revises tax law to broaden access, protect property purchases

Argentina's government is pushing a revised Fiscal Innocence law, aiming to simplify tax compliance and bring "mattress money" into the formal economy. The latest draft, sent to Congress, removes previous income and wealth caps, potentially opening the regime to a much wider range of taxpayers.

Previously, individuals needed to earn under $1 billion pesos annually and possess less than $10 billion pesos in assets to join the simplified tax plan. These limits are now gone, making the program "practically universal" for individuals not classified as major national taxpayers, according to César Litvin, CEO of Lisicki, Litvin & Asociados. Even large taxpayers can join, though only for simplified reporting, not other benefits.

A significant clarification addresses real estate transactions. The new text explicitly states that cash payments for property purchases are permissible under the law. This aims to resolve a key uncertainty and encourage the use of undeclared savings for buying property without losing the law's benefits.

The Ministry of Economy, led by Luis Caputo, has not responded to queries about the initiative. The changes reportedly incorporate feedback from tax specialists who met with Caputo and ARCA head Andrés Vázquez. They had warned that earlier versions might discourage participation in the simplified income tax scheme, a cornerstone of the government's strategy to incentivize the use of informal savings.

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The income and wealth limits for joining the regime are eliminated, meaning a much larger number of taxpayers, regardless of their wealth and annual income, can join the simplified income tax regime.