President Javier Milei achieved two significant victories on Friday: the congressional endorsement of his inaugural budget bill and the establishment of a new law that enshrines the principle of innocence in cases of tax evasion. This legislation aims to enable Argentines to utilize their savings, particularly in dollars, with reduced oversight from governmental authorities. The legislation, referred to as “fiscal innocence,” alters the Argentine tax framework by relaxing regulations and increasing the limit on the amount of money that Argentines can expend without the necessity of explaining the source of those funds. One of its primary objectives is to motivate individuals to utilize the dollars they store “under the mattress” — a phrase that refers to funds held outside the banking system and, as a result, excluded from the nation’s cash flow. “Although the Argentine judiciary system asserts that we are all innocent until proven guilty, in the context of tax matters, we find ourselves presumed guilty until we can demonstrate our innocence,” Milei remarked during an interview. Following the passage of the law, the president stated in an X post that the new legislation is “revolutionary” and that it will “bring back the freedom” to utilize savings. “We are safeguarding the savings of Argentines indefinitely. No administration that follows us will have the capacity to seize the savings of responsible citizens.
A new streamlined income tax framework was established as a component of the legislation. The initiative will enable taxpayers enrolled in the program to forgo the regular requirement of disclosing their asset holdings to authorities, thereby streamlining administrative processes. Their tax liabilities will be determined based on their reported income. The regime is applicable solely to residents whose income is derived exclusively from Argentine sources. Economy Minister Luis Caputo stated that, under the new law, individuals can deposit dollars in their banks and access those funds immediately, with the sole requirement for banks being that clients must be registered in the simplified income tax regime. “If your bank starts asking for more information, don’t waste your time,” he stated.
The legislation has sparked apprehensions regarding its potential misuse for criminal activities, including tax evasion, money laundering, and drug trafficking, with the state seemingly unable to intervene. Several months prior, upon the government’s introduction of the bill, Milei expressed indifference regarding how Argentines manage their finances and the origins of those funds. He asserted that any related issues ought to be addressed by the judiciary, emphasizing that the criminal domain must remain entirely distinct from fiscal oversight. Tax evaders, he also said, “are heroes, not criminals,” a phrase the anarcho-capitalist has repeated often to express his discontent with the historically high taxation levels in Argentina, which have been employed to sustain its ongoing fiscal deficit. The recent fiscal legislation permits Argentines to utilize nearly US$70,000 without the obligation to disclose its source to the national tax authority, ARCA. Until now, taxpayers faced allegations of tax evasion if they could not substantiate the source of any expense exceeding US$1,000, a threshold deemed antiquated by the government. Residents will now be subject to investigation for making unjustified money movements beginning at AR$100 million (approximately US$68,000). Undeclared movements of AR$1 billion (US$680,000) or more are now classified as aggravated tax evasion, which may result in a prison sentence of up to nine years.
The new legislation stipulates that ARCA will grant amnesty to individuals who settle their tax liabilities and accrued interests, thereby refraining from pursuing criminal charges against them. This benefit is limited to a single use per individual. Should a complaint have been lodged, the authorities will dismiss it upon the taxpayer settling the debt, accrued interest, and an additional penalty amounting to 50% of the original debt. The statute of limitations for tax debts has been reduced from five years to three years, indicating that individuals who fail to pay will be released from liability more swiftly. Under the newly implemented simplified income tax regime, individuals with annual earnings not exceeding AR$1 billion and assets below AR$10,000 billion will be classified as non-large taxpayers. Consequently, ARCA will cease to scrutinize their expenditures or asset holdings. The agency will consider solely the income reported by the taxpayer and their deductible expenditures to determine the tax liability. This indicates that those taxpayers will have the capacity to acquire assets or conduct substantial monetary transfers without the requirement to disclose the nature of such transactions to the tax authority or financial institution. “Now, you will have the freedom to spend as you wish, without oversight or taxation based on your reported income,” Milei stated during an interview.