Congress approves second ‘Fiscal Innocence’ law to attract stashed dollars

The Senate recently approved changes to the Fiscal Innocence law, which aims to encourage Argentines to bring their hidden dollars into the formal economy with reduced supervision. The modifications include more tax benefits and fewer restrictions compared to the original law, which was enacted last December. This update, known as Fiscal Innocence II, was passed by the Senate on Thursday night with 44 votes in favor and 23 against.

The bill, which was supported by various political blocs, is designed to make the savings of individuals more accessible for banking use, ultimately contributing to Argentina's economic growth.

President Javier Milei and Economy Minister Luis Caputo proposed the modifications after enrollment in the initial system fell below expectations. The new law introduces a different method of calculating income tax, allowing taxpayers to avoid filing a statement of assets at the beginning or end of a tax year, and presumes that individuals are not evading taxes.

Authorities will only question the declared assets if there is a significant discrepancy, defined as a difference of 15% or 5% of tax evasion according to the Criminal Tax Law.

Large taxpayers, with incomes exceeding AR$1 billion (US$653,600) or net worth over AR$10 billion (US$65,359,400), are now eligible to enroll in the Simplified Income Tax Regime, although they will have to undergo tax reviews. The deadline for the law's implementation is December 31, 2027. The new version of the law also prohibits public officials and those who have held office within the past five years from benefiting from the simplified income tax system.