The United States and Argentina agreed on Monday to have their tax agencies automatically share data about citizens’ banking and investments in each other’s countries.
The government in Buenos Aires hopes this will lead to an estimated US$100 billion that Argentines have tried to shelter in the United States.
Financial data is already shared between the two governments on a case-by-case basis, but this arrangement should give taxing authorities automatic access to information about such investments, whether they’re made as individuals or through companies and trusts, Economy Minister Sergio Massa said.
The accord seeks fiscal transparency and “strict justice”, so that “the Argentine who pays their taxes, completes their obligations and makes the effort every day to contribute to the sustainability of the state isn’t cheated by those who find mechanisms of evasion through tax havens,” Massa said.
The agreement, which takes effect early in 2023, was signed by Massa and US Ambassador Marc Stanley. Massa said it reflects mutual confidence and cooperation, “opening a more mature chapter of relations” between the two nations.
An earlier accord signed with the US in 2017 during the presidency of Mauricio Macri proved to be worthless, because Argentines could evade the reporting rules by transferring money between US accounts, and the Argentine government had to make specific requests, a process that yielded information on only 68 citizens, Massa said.
With this accord, the IRS and Argentina’s AFIP will share such information automatically, resulting in a flood of data, not only about cash held in bank accounts and corporate profits, but also rent collected through real estate investments, Massa said.
Massa called on Argentina’s Congress to approve legislation that would encourage citizens to move their money back to Argentina, and punish with the full force of the law those who don’t declare their wealth. The government hopes to have such legislation ready by year’s end.
Previous governments have initiated similar efforts in the past, and yet Argentina estimates that US$100 billion in undeclared wealth is being held in the United States alone.