After six months of debate, the government finally achieved passage of the Tax Innocence Law, which was approved by the Senate on Friday. The rule is intended to allow taxpayers to use their undeclared dollars – the so-called “mattress dollars” – without the risk of being questioned by ARCA (the former AFIP). The official intention is to offer a guarantee to future administrations so that savers can use these funds without having to justify their origin.
Formally, the law amends Law 24,769 of the penal tax system by updating the amounts above which tax evasion occurs. It also increases the values that require notaries and financial institutions to report transactions to the debt collection agency.
The most important changes include raising the limit for simple tax evasion from 1.5 to 100 million pesos and for serious tax evasion from 15 to 1,000 million pesos. In addition, the amounts considered a crime for fraudulent invoices are increased to 100 million pesos, and the debts related to non-compliance with tax concession regulations are increased to 200 million pesos.
The law also includes a form of “tax forgiveness”: ARCA will not file criminal charges if the taxpayer forgives the debt and the corresponding interest. In cases where the lawsuit has already been filed, it is planned to terminate the criminal action by paying the total amount owed, interest and an additional 50%.
Another relevant point is the shortening of the limitation period for tax debts, which falls from five to three years.
New simplified winnings regime
The scheme introduces the simplified earnings system, which can be joined by individuals who have an annual income of less than 1,000 million pesos and assets of less than 10,000 million pesos, provided they are not considered large taxpayers.
The regulation includes a key change: ARCA no longer assesses the amount of expenses and the assets of the taxpayer. The tax calculation is carried out exclusively on the basis of the invoiced income and deductible expenses. If the taxpayer pays the amounts set by the authority on time, he is exempt from further claims to profits.
This means those who comply can use undeclared dollars to purchase assets subject to registration, such as cars or real estate, without automatically coming under agency scrutiny. At the same time, banks, retailers, notaries and card companies are no longer required to report these processes.
Who can benefit from this?
Experts warn that the benefits associated with using undeclared dollars for relevant operations only apply to those who join the Simplified Earnings Regime. This system does not automatically include Monotributistas or taxpayers registered in Ganancias who choose not to join.
For a monotributist wishing to enter, the transition means abandoning the current regime and moving to the simplified earnings regime, a more expensive and administrative procedure whose estimated economic burden is two to three times higher than the current regime. Some tributaries find a temporary bridging mechanism necessary to facilitate this passage.
Employees in a dependent relationship will also not be entitled to the benefits unless they join the scheme and start submitting annual affidavits.
Those who comply have a “fiscal lock”: the declaration is accepted under the assumption of accuracy and the organization only assesses income, deductions and expenses, without taking consumption or assets into account.
Risks and limits
However, the regime does not constitute money laundering. Although the taxpayer is exempt if he pays on time, this presumption may fall if the ARCA detects what the law defines as a “significant discrepancy”, for example if a loss of income is detected that exceeds 15% of the corresponding tax.
The Agency can detect irregularities through third-party complaints or other sources of information. Although the law reduces the amount of data ARCA receives – since notaries no longer report deeds and banks only report deposits over 50 million pesos – there is still the possibility that the agency will find discrepancies.
Experts point out that using undeclared dollars for regular consumption and cash payments is probably out of the question. However, they point out that the official aim is to use these funds to acquire assets subject to registration. In this type of operation, possible inconsistencies could lead to income tax adjustments.
Some analysts believe that although the rule is not money laundering, it could attract small savers who have not entered the 2024 money laundering scheme because of their documentation requirements. They argue that many savers saved money from legal sources of income (salaries, registered activities or businesses) but turned to the informal market due to restrictions that prevented them from purchasing foreign currencies from banks.
Impact on the tax penalty system
The update of the parameters for tax evasion complaints, increasing from 1.5 to 100 million pesos, will allow numerous cases involving amounts considered trivial to leave the courts. The aim of the adjustment is to reduce the legal effort and only leave cases of greatest economic relevance.
The new system in which ARCA prepares the income tax affidavit will also reduce the cost of accounting advice for taxpayers.
Automatic fines
The auditors expressed concern about the sharp increase in automatic fines for non-compliance with the affidavits, which increased from P200 to P200,000. Although the increase responds to an update in values, they warn that the impact will be significant for small taxpayers and working professionals who may be forgotten.
The criticism led the authorities to reiterate their intention to mitigate the impact of these sanctions. As industry representatives explained, the system should not impose the same penalty on a small company that fails to comply with a presentation as it does on a large company with much greater economic performance.
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