The government has already begun to create a mechanism that from January 1 will force investors and investors of all sizes to pay tax on financial income. Both fixed-term deposits and investments in bonds and mutual funds will be taxed at a rate of five percent of the profits if these are dollar positions, or 15 if they are in local currency. The tax-free minimum for this type of earnings will be a little over $ 66,000. This is the second tranche of tax reform.
The Secretary of Public Income, headed by Andres Edelstein, has already published a draft regulatory act on income tax on his website. There, accountants and economic experts will be able to make observations and suggest changes. The decree must be authorized before the end of the year, after which the Federal Administration of State Revenue (Afip) passes resolutions that introduce new provisions into effect.
The first part of this collection began to apply at the beginning of this year. This aliquot affected the financial income of non-residents. In a hurry with the opposition, the government Mauricio Macri wanted to give a progressive image. He advanced with a tax that touched Lebach, which he issued at the Central Bank. The effect was a fall among foreign investors who went in to take advantage of the benefits that letters give, combined with a quiet dollar. Then the price of a dollar, which occurred in just over a month from $ 20 to $ 42, exploded.
Financial income tax will cause severe discomfort among investors and investors, a political value that will not be offset by collection efficiency. Daniel Vichien, commercial director of general investment funds (FCI) Balanza, suggested that this market segment is unlikely to contribute to the treasury of about 200 million US dollars. The analyst explained that "the total amount of general investment funds in the country is about 570,000 million dollars." Since the only investment that will be released in accordance with the rules will be shares of Argentine companies, FCI local private paper will not be taxed. The problem arises of how to determine when the fund is owned by local Argentine stocks, since most combine different investments in their portfolios. The draft decree establishes that they must have at least 75 percent of their underlying assets in Argentine stocks. This share may fall due to the movement of portfolios, but not more than 30 days a year. Vichien explained that of the total funds under management, only $ 20,000 million is in local activities. ” That is, it will be reached 550 000 million. According to the director of Balanz, this group of FCI, whose portfolios consist of fixed incomes and government securities, has accumulated income of 156,000 million dollars in the first 10 months of this year. “If a five percent interest rate is applied, they will pay $ 7.8 billion, which is slightly more than $ 200 million.” But the manager noted that since the tax is paid at the time of saving the funds, if the investor decides to save his money in FCI, he does not pay taxes.
Another question that needs to be determined is how Afip finally determines that financial income is paid. It can be found that banks act as retention agents, especially in fixed conditions that are easier to identify. But what happens in the case of more complex investors who can invest their capital in different instruments, some of which may lose in a certain period, while others are positive.
There they believe that Afip may determine that those that have been reached in tax documentation are sworn. “As an administrator, FCI can determine if its client exceeds the minimum tax,” explained Vichien. First of all, if a person had other types of investments in a bank.
Another point to consider. ADRs are evidence of shares of Argentine companies listed on the New York Stock Exchange. They are going to pay financial income. But it may happen that some investor would like to avoid tax. When a company pays dividends, some may sell a certificate in the United States and buy the appropriate local share. But this was already excluded. ADR sales and switching to local stocks will also be taxed.