President Alberto Fernández’s government has signed a new agreement with the United States to exchange tax information, with which Argentina hopes to "detect tax evaders," Economy Minister Sergio Massa announced on Monday.
The agreement, covering both individual persons and corporate entities, was signed by Massa and US Ambassador to Argentina Marc Stanley during a ceremony at the Centro Cultural Kirchner.
"Access to this information is an act of fiscal justice because by detecting tax evaders we will be able to reduce the tax burden on all those who comply with their obligations every day while seeing others hiding their money in tax havens," declared Massa.
"We know the impact which the agreement will have next year but also for the next five or 10 years to come," highlighted the minister, who assured that he was seeking fiscal transparency.
"With this agreement there begins a deeper and more mature chapter in the relationship between both countries," he added, underlining the impact this will have not only for 2023 but also for the next five to ten years.
The US Embassy published a communiqué specifying that "this agreement will permit the reciprocal exchange of certain information regarding financial accounts" between the two countries while "guaranteeing adequate data protection."
"The agreement advances the shared objective of improving international tax compliance," the Embassy observed.
The pact, which provides for automatic exchanges of information on predetermined dates, will kick in with the new year. The Internal Revenue Service (IRS) will transmit annual data every September 30.
According to Economy Ministry estimates, undeclared funds held by Argentines in accounts in the United States stand at around US$100 billion out of a total US$400 billion worldwide. The incoming information could mean an annual billion for the Argentine taxman.
Speaking prior to the ceremony in an interview with Radio Con Vos, Massa explained that he had been working on this agreement since the first week he became minister, recalling his first trip to Washington.
"We firmly told the United States that they had to stop being a tax haven for evaders," he pointed out.
"Over the next nine months the United States will be providing all the accounts of Argentine citizens, whether individual or corporate, as well as the sources of dividends," Massa explained.
Among other details, the minister explained that the US tax authorities will be delivering information on the names of account-holders, gross sums deposited and all US dividends with their sources.
In return, local banks will be obliged to inform US authorities of all the details of the accounts of their citizens in Argentina. The minister also indicated that the agreement contemplates a commitment to confidentiality on both sides.
As from the first day of next year, the AFIP tax bureau will have mass access to all the accounts of Argentines in the United States, both personal and corporate with Argentines as the final beneficiaries.
Prior to the signing, Stanley commented that “putting into motion the Foreign Account Tax Compliance Act (FATCA) is important for the United States because it will clear the exchange of information relative to financial accounts whose holders are people specific to the United States or via certain entities in Argentine [financial] institutions.”
“This agreement is reciprocal, and the United States will also provide information on Argentine accounts in US financial institutions,” said the envoy.
Along the same lines, Massa highlighted that via this agreement Argentina will have greater capacity to vet accounts overseas since as from 2017 FATCA works via specific requests and requirements.
Central Bank Governor Miguel Angel Pesce, Chamber of Deputies Speaker Cecilia Moreau and AFIP tax bureau chief Carlos Castagneto, among others, attended the signing, as well as Economy Ministry and US Embassy officials.
AmCham, the US chamber of commerce in Argentina, issued strong support for the accord, stating that its central aim is battling against fiscal fraud. Lending their support to the agreement, the chamber highlighted that the signing of the agreement represented a more than significant step in bilateral relations and achieved the equality of tax obligations for all Argentine citizens. Implementing the Foreign Account Tax Compliance Act would generate greater transparency and growing confidence in all sectors, it said.
A press communiqué indicated that the main challenge lying ahead is to create opportunities and boost national development, thus bringing certainties to a complex and defiant context. Signing the agreement is understood as a further step along this road.
Lastly, AmCham highlighted that it will be possible to consolidate sustained economic recovery along these lines with positive indicators for private investment and the creation of quality employment.
According to the information provided, Argentina will have access from next January 1 to September 30 to all the personal and corporate accounts of its citizens in the United States.
The government is seeking Congress approval before the year is out, but the proximity of the date generates uncertainty. Via this programme Argentine banks will become subject to the obligation of declaring information according to the requirements of the US authorities.
In parallel, the government will send to Congress an “Exteriorización de Capitales” or ‘whitewash’ bill to give those with undeclared accounts the possibility of straightening out their situation.
Speaking at Monday’s press conference, Massa emphasised that the government is not seeking to "persecute anybody" but to prevent "those Argentines paying their taxes and complying with their obligations from being mocked by the evaders in tax havens."
The minister specified that the agreement will reach "citizens who have signed their declaration as foreigners at the time of opening an account in the United States, whether in individual or corporate form, and not only the transfers to those accounts but also their earnings in interest."
He added that those who have purchased a property with a mortgage via a company of which they are members will be vetted.