Fiscal Innocence: The keys to the project Caputo will present tomorrow to encourage the use of 'mattress dollars'

Argentina's government is set to reintroduce a key economic initiative designed to incentivize the use of undeclared "mattress money." Economy Minister Luis Caputo will present the new "Fiscal Innocence" law, which the executive branch will send to Congress on Thursday with amendments aimed at broadening access to a simplified income tax regime and strengthening taxpayer guarantees.

The project's presentation follows weeks of collaborative work between the economic team, the Tax and Customs Collection Agency (ARCA), and tax specialists. They had previously noted that certain aspects of the original version could discourage participation. Consequently, the project's submission to Congress was delayed, leading to an extension of the deadline for filing income tax returns.

A significant change in the new law is the elimination of previous limits on assets and income. The current version capped assets at $10 billion pesos and annual income at $1 billion pesos for entry into the regime. The revised text removes both restrictions, making the primary condition for access having Argentine tax residency and not being categorized as a National Major Contributor. This modification aims to significantly expand the number of individuals eligible for the "fiscal cap," a mechanism where ARCA refrains from scrutinizing the origin of funds used, provided legal conditions are met.

Another central point of the project addresses the real estate market. The new wording explicitly clarifies that cash payments made in public deeds are compatible with the benefits of the regime. This definition seeks to resolve one of the main concerns raised by notaries, developers, and taxpayers since the initiative was first announced. The clarification is particularly relevant as a substantial portion of real estate transactions in Argentina continue to involve cash payments, even if later documented by a notary. Under the new text, such operations will not automatically result in the loss of benefits provided by the law. The project also modifies the treatment of "significant discrepancies," where ARCA's determined adjustment exceeds 15% of the taxpayer's declared amount, by incorporating an exception for differences not exceeding 5% of the amount for simple tax evasion.