The main legislative initiative of Javier Milei’s administration, the Framework Law, was approved in Congress after six months of processing and negotiations. On the fiscal side, Argentina has launched a new tax amnesty that exempts assets up to 100,000 dollars from costs. Additionally, the Income Tax is reinstated, and the Personal Assets Tax is reformed.
The specialized tax team at KPG Argentina explains the changes regarding capital regularization.
The regime provides the opportunity to regularize undeclared assets in Argentina and abroad, including stocks, real estate, money in accounts, and crypto assets. The amount to be declared is determined based on a progressive scale and specially designed conditions to encourage adherence to the regime. Taxpayers who are considered fiscal residents as of December 31, 2023, and non-residents who were once fiscal residents in Argentina, can adhere to the tax amnesty. As a condition for non-residents who once were residents to enter the regularization, they must regain the status of fiscal resident in Argentina, which implies being taxed on global income and assets.
Adhering to the regime means that tax authorities cannot claim taxes on the declared assets and/or the operations that generated them.
Assets up to 100,000 dollars—considering the family group up to the first degree of kinship—can be declared at no cost (0% rate). Assets exceeding 100,000 dollars are taxed at progressive rates of 5%, 10%, or 15%, depending on the stage of adherence to the regime.
Under special conditions, declared funds exceeding 100,000 dollars will also have no cost (0% rate) if the money is deposited in an Argentine banking institution and kept there until December 31, 2025.
Taxpayers can declare assets in Argentina and abroad under this regime. It is particularly attractive for those who do not intend to repatriate their assets from abroad since the regime allows assets to remain outside the country without an obligation of repatriation.
Impact on Argentine Taxes with the New Law
The Argentine government’s tax reform entails an increase in taxes, with the controversial reinstatement of the Income Tax (salary or income tax) affecting around 800,000 workers. The tax will impact more people but at a lower rate, especially for higher salaries.
Additionally, the minimum threshold for the Personal Assets Tax (wealth tax) has been increased.
The “Country Tax,” which taxes imports and is part of the legal framework needed to lift exchange controls, remains in place.
Summary of Changes by KPG Experts
Personal Assets Tax: The Special Entry Regime for the Personal Assets Tax has been incorporated, allowing for the advance payment of the tax for the years 2023 to 2027 inclusive, at a rate of 0.45% on the assets existing as of December 31, 2023, multiplied by 5, resulting in a rate of 2.25% for that period.
The benefit, in exchange for this advance tax payment, is fiscal stability until 2038 concerning national patrimonial taxes.
Income Tax: With the approval of the “tax package” in Congress, the Cedular Tax that taxed workers’ income for the current fiscal year was repealed, and the general Fourth Category regime was reinstated with retroactive effect to January 1, 2024.
The new “floor” for the Income Tax will be approximately 1,800,000 pesos (about 1,321 dollars at the MEP dollar rate) per month for single workers and 2,300,000 pesos (1,688 dollars) per month for married workers with two dependents. A progressive tax scale will be applied, starting at 5% of net taxable income, reaching a maximum of 35%.
Real Estate Transfer Tax: The 1.5% tax on the sale of properties purchased before December 31, 2017, is repealed.
Monotax: The parameters and amounts of the regime are updated, effective from January 1, 2024, allowing those excluded for exceeding parameters during 2024 to re-enter.
The Framework Law includes a moratorium on the payment of various taxes: “a regime for regularizing tax, customs, and social security obligations due by March 31, 2024, inclusive, with total waiver of fines and substantial interest reductions. The new moratorium explicitly includes the possibility of regularizing the Solidarity and Extraordinary Contribution (“wealth tax”) created during the COVID-19 pandemic. In addition to the possibility of entering the debt into payment plans with the indicated waivers in installments (the number of installments varies according to the type of taxpayer, from 36 to 84), the new law allows for the waiver of non-final fines and interest when the principal is paid before March 31,” explain the KPMG experts.
For Magdalena Martínez
