Argentina’s Macri hunts missing $500 billion in tax amnesty

Bloomberg

Argentine President Mauricio Macri announced an amnesty on an estimated $500 billion of unregistered funds stashed abroad to pay pensioners and help fund a multi-billion dollar infrastructure program.
The funds will pay a tax of zero percent to 15 percent depending on the amount and when they are brought back into the country, the government said in a statement. The government needs to raise 47 billion pesos ($3.4 billion) to pay legal sentences awarded to pensioners, and another 75 billion pesos a year to pay higher pensions in future.
“Today with this law we’re sending to Congress we’re seeking to repair years of injustice because we’ve found lots of situations where pensioners have made legal claims, won judgments and yet the state persists in seeking any trick to avoid paying,” Macri said in a televised speech.
Macri will have to overcome people’s mistrust of the Argentine authorities for the amnesty to be a success. During the default of 2001, the government restricted bank withdrawals and converted people’s dollar savings into pesos during a period in which the local currency collapsed 75 percent.
Still, an international tax sharing agreement that begins in 2017 will make it much more difficult for Argentines to continue hiding funds abroad, Finance Minister Alfonso Prat-Gay said.
The tax amnesty “is the first that rewards those who were up-to-date,” Prat-Gay said Friday. “We’re offering this last opportunity because from January the tax agency will have all the instruments it needs to search for that money in any part of the world.”

Offshore Assets
Argentines held approximately $400 billion in offshore assets in 2012, according to calculations by the Economic and Financial Center for the Development of Argentina, or CEFIDAR. That number is likely to have increased to $500 billion, or about the same as its annual gross domestic product, according to Jorge Gaggero, founder of the Tax Justice Network for Latin America and the Caribbean.
Argentina will hope to emulate Chile, where a similar amnesty last year collected $1.5 billion in revenue, more than 10 times the amount forecast. Brazil started its own similar plan last month.
The government hopes to attract about $20 billion from the tax amnesty, La Nacion reported, citing government officials.