Argentina's New Tax On Residents Global Wealth

[dsp27]

Argentina's new tax law requires everyone living in Argentina to pay a tax of up to 2.25% of all their assets worldwide, every year. In 10 years you will pay 22.5% of all your savings, real estate, stocks, etc.
It's tempting to think that we will just ignore it but from what I've read, failure to pay leaves you open to serious penalties whenever they catch up to you.
This seems to be an invitation for people with any form of financial security to leave Argentina.
For those of you that have experience dealing with AFIP, are they likely to enforce this law? Can they access accounts, tax info, property records in the US?

Will the last person to leave Argentina please turn out the lights.

This law cannot and will not be enforced. You have a very narrow read of the law. Any law is ambiguous by virtue of the legislative process — that’s why eventually the executive or any enforcement agency will come up with an interpretation of the law to — hopefully — clear up any ambiguity. If one is not happy with the way the law has been interpreted you go to court and argue your case, decision is made and the interpretation can change and/or the legislator can decide to amend the law…etc…

Residence is a term used in both immigration and tax law and should not be mixed up. Even in the US you can be a “resident for tax purposes“ but not really reside in the US, and vice versa.

In Argentina even tourists are residents — residencia transitoria. So what happens if you happen to spend a few extra days here say 91/181 as a tourist, are you claiming the AFIP will come after you? Nonsense. The AFIP cannot even collect taxes due from the Argentines who live here and are literally under their noses. Think of the verdulerias mafia and the billions of pesos syphoning trough. How would they know you have a house in Ohio or that you have saved $US200k in a fund in NY? They won’t. Unless you tell them. But even if they knew about it the case is very very complex for them to resolve and they won’t take on it, do they tax you on bienes acquired before you became a resident? How do they interpret the share of those assets acquired before you became resident in Argentina? Etc. etc…the list goes on.

In any case, this law is obviously meant to capture la fuga de capitales and “encourage” the repatriation of capital that has left the country. They won't go after the expat community as there's very little money to be made and it creates a major headache and precedent in international tax law. The wording is sloppy but it doesn’t matter, what matters is how the executive will interpret it based on intent and the enforcing agency’s capacity.

 

[jeff1234]

This law cannot and will not be enforced. You have a very narrow read of the law. Any law is ambiguous by virtue of the legislative process — that’s why eventually the executive or any enforcement agency will come up with an interpretation of the law to — hopefully — clear up any ambiguity. If one is not happy with the way the law has been interpreted you go to court and argue your case, decision is made and the interpretation can change and/or the legislator can decide to amend the law…etc…

Residence is a term used in both immigration and tax law and should not be mixed up. Even in the US you can be a “resident for tax purposes“ but not really reside in the US, and vice versa.

In Argentina even tourists are residents — residencia transitoria. So what happens if you happen to spend a few extra days here say 91/181 as a tourist, are you claiming the AFIP will come after you? Nonsense. The AFIP cannot even collect taxes due from the Argentines who live here and are literally under their noses. Think of the verdulerias mafia and the billions of pesos syphoning trough. How would they know you have a house in Ohio or that you have saved $US200k in a fund in NY? They won’t. Unless you tell them. But even if they knew about it the case is very very complex for them to resolve and they won’t take on it, do they tax you on bienes acquired before you became a resident? How do they interpret the share of those assets acquired before you became resident in Argentina? Etc. etc…the list goes on.

In any case, this law is obviously meant to capture la fuga de capitales and “encourage” the repatriation of capital that has left the country. They won't go after the expat community as there's very little money to be made and it creates a major headache and precedent in international tax law. The wording is sloppy but it doesn’t matter, what matters is how the executive will interpret it based on intent and the enforcing agency’s capacity.

You are quite right, before the law can be enforced it must go through legal and political challenges. Having agreed with you on that point I'd like to answer your question about how AFIP would know that you have a house or fund in the US. It's my very amateurish understanding that CRS, the Common Reporting Standard (https://www.crs.hsbc.com/) was designed to share your information between governments. I suppose that if you deduct real estate taxes on your US taxes or show interest earned on a fund, that information could be shared with Argentina who would then have to figure out a current value of the assets and tax you on it. More importantly, AFIP would have to get you to tell them what your US tax identification code is in order to connect you to the US assets. For myself, I see that as the threshold, if AFIP ever gets to the point of asking me for my US id, then the possibility of them taxing me becomes a real possibility.

 

[dsp27]

You are quite right, before the law can be enforced it must go through legal and political challenges. Having agreed with you on that point I'd like to answer your question about how AFIP would know that you have a house or fund in the US. It's my very amateurish understanding that CRS, the Common Reporting Standard (https://www.crs.hsbc.com/) was designed to share your information between governments. I suppose that if you deduct real estate taxes on your US taxes or show interest earned on a fund, that information could be shared with Argentina who would then have to figure out a current value of the assets and tax you on it. More importantly, AFIP would have to get you to tell them what your US tax identification code is in order to connect you to the US assets. For myself, I see that as the threshold, if AFIP ever gets to the point of asking me for my US id, then the possibility of them taxing me becomes a real possibility.

they won't. they re not after you. they are after wealthy argentines who live or have their assets in Miami, Punta del Este etc.

 

[Johnny]

they won't. they re not after you. they are after wealthy argentines who live or have their assets in Miami, Punta del Este etc.

You're upsetting the obsessive-compulsive fear mongers. Cease and desist oh rational man!

 

[ben]

they won't. they re not after you. they are after wealthy argentines who live or have their assets in Miami, Punta del Este etc.

And have fun nabbing those.
The thing about capital is that it knows how to move. Those Argentines with enough money to keep their assets abroad are precisely those who will know how to set up shell companies and all that.

When you’re by far the biggest and most powerful country in the world, where nearly every bank must be able to operate, you can throw your weight around and pass FATCA. When you’re Argentina? Good luck.

 

[toongeorges]

The thing to bear in mind is, that the “target” of these regulations (capital stored abroad by people with enough money and know-how to do that) will invariably figure out how to dodge them.
They will be left chasing small fish.

There are people in the middle. The very rich will find ways to escape the taxes. The middle class will not have the means to and will be hit. The result is always more poverty, not less.

 

[sts7049]

You are quite right, before the law can be enforced it must go through legal and political challenges. Having agreed with you on that point I'd like to answer your question about how AFIP would know that you have a house or fund in the US. It's my very amateurish understanding that CRS, the Common Reporting Standard (https://www.crs.hsbc.com/) was designed to share your information between governments. I suppose that if you deduct real estate taxes on your US taxes or show interest earned on a fund, that information could be shared with Argentina who would then have to figure out a current value of the assets and tax you on it. More importantly, AFIP would have to get you to tell them what your US tax identification code is in order to connect you to the US assets. For myself, I see that as the threshold, if AFIP ever gets to the point of asking me for my US id, then the possibility of them taxing me becomes a real possibility.

ain't gonna happen. and IF it ever gets to that point, i will be long gone from here. the pelotudos in government aren't getting anything from me that i had before i came here.

 

[Alby]

The anecdotal information and opinions emerging here about how the culture, politics and practice intersect in the real world application of such laws are very useful. Please keep them coming, particularly anyone who has information about how much of a threat the CRS might be.

At this point it worth remembering that this conversation started over on the "5 Americans" thread on Friday in response to someone's question about the Rentista visa. The problem with the "they will never come for us unless we tell them" argument for people in that situation is that they openly declare from the very beginning their asset; it is the only way to be eligible for the Rentista visa. Of course it's a different part of government, and of course in an inefficient bureaucracy different agencies don't communicate well with oneanother. Even so, should people on or considering the Rentista visa be worried? There would be few things worse than surviving the horrors of the DMN system to then discover that all you have achieved is to buy yourself a massive tax bill or a legal battle with AFIP.

 

[Stantucker]

You're upsetting the obsessive-compulsive fear mongers. Cease and desist oh rational man!

Are you really calling fear mongers people who are afraid of having to pay corrupt govts a ridiculous percentage of their lifetime accumulation of assets and who are just looking for honest answers to questions about new legislation? For me a fear monger is someone who spreads fear just for the sake of spreading fear.

 

[Alby]

Another argument against too much complacency on this issue is that we are placing a bet that has to last over, for some of us, many years. Bureaucracies (especially in countries like this) probably don’t become more efficient over time, but governments can become, for example, more xenophobic. What we are saying about the likelihood of AFIP wanting to or being able to come after us today, under this government, has to still be valid in ten or twenty years. If it is not, we are potentially buying ourselves big headaches in the future and we need to think carefully about that, and the choices we make now.