The national government has submitted to Congress a draft “Law on the Principle of Tax Innocence,” an initiative that radically transforms Argentina’s punitive tax system and changes the way the state analyzes, controls and discusses taxes with citizens.
According to the official text, the central aim is to legally “shield” those who use “dollars under the mattress” and to reduce the number of criminal prosecutions for tax evasion, which currently carry prison sentences of up to nine years. This is what the ruling party claims The taxpayer must be presumed innocent until the treasury proves otherwise.
The impact of this project leads to concrete reforms that have a direct impact on the Criminal tax law, regulation of tax penalties, tax limitation periods and in particular simplifying income tax accounting for private individuals.
The proposal aims to encourage the flow of undeclared money into the market by eliminating controls on the origin of funds used for personal consumption, which the ruling party presents as an incentive “individual economic freedom.”
Evasion threshold: from 1.5 to 100 million US dollars
One of the most relevant points of the project is the Updating the objective thresholds that determine the structure of tax crimes. In fact, The most significant change in the project is to multiply the minimum amount that allows criminal prosecution for simple evasion by 66 times. According to the official text The lower limit for investigations against a taxpayer increases from $1.5 million to $100 million. In cases of serious tax evasion, the threshold increases from $15 million to $1,000 million.
This increase implies that large proportions of taxpayers could currently be subject to criminal prosecution will be beyond the reach of tax justiceeven if they have not declared taxes on million-dollar transactions. It’s worth noting that there are still workarounds for smaller amounts Administrative violations which can be prosecuted and sanctioned by the ARCA (Customs Collection and Control Agency), which requires security measures such as embargoes and inhibitions by the judiciary, but does not entail criminal prosecution or prison sentences for the perpetrator.
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Express prescription: 5 to 3 years
The project shortens the period in which ARCA can demand payment of taxes owed or file criminal charges from 5 to 3 years. This shortening of the statute of limitations significantly limits the State’s ability to investigate evasion practices discovered after the relevant tax period.
Simplified income system
The initiative also creates a simplified income tax system for individuals with annual income of less than $1,000 million and assets of less than $10,000 million. The central feature of this scheme is the following the obligation to report and justify the origin of personal consumption no longer applies.
In practice, this rule would allow a taxpayer with declared assets of, say, $5,000 million to make millions of dollars in purchases, trips or investments without ARCA being able to question whether those expenses amount to properly taxed income.
Criminal charges
The project submitted to Congress provides that ARCA You cannot file a criminal complaint if the taxpayer cancels the tax debt before the charges are filedor if you pay 100% of the amount owed plus interest and a 50% late fee within 30 days of the start of the investigation.
In practice, this regulation turns this surcharge payment into a kind of “passport of impunity” that automatically blocks the actions of criminals, even if the evasion was deliberate and over a long period of time.
Formal fines
The project proposes a counterweight to the de facto decriminalization of evasion of small amounts Multiply fines for formal non-compliance. The penalty for failing to file the affidavit, currently $200, would increase to $220,000 for individuals and $440,000 for corporations.
Political context and background
The initiative is part of the Javier Milei government’s strategy to reduce the effective tax pressure on the different sectors of society following the money laundering in 2024, which, according to official data, allowed the regularization of more than $20,000 million in undeclared assets.
This “Fiscal Innocence” project deepens this line by guaranteeing that those with undeclared money can use it without risk of investigation. provided that their consumption does not exceed the thresholds set out in the simplified scheme.
The parliamentary process of the initiative will begin in the coming weeks in the committees of the Chamber of Deputies, where the ruling party will seek consensus with the dialogue blocs to ensure their approval before the summer parliamentary recess.
FN/EM
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