Argentina's Liberation Day
Today the Milei government announced the "Historic Plan for the Reparation of Argentine Savings."
Welcome Avatar! Today the economic team of the Milei government announced a real Liberation Day for Argentines: less controls on savings, payments, and taxes trough a historic initiative to give people back their financial freedom and let them spend their money however they see fit. Let’s go over the details.
Right off the bat, spokesman Manuel Adorni started the conference with a banger:
“We have normalized absurd practices, such as requiring banks to report all cash withdrawals and businesses to report any type of purchase.
Politics treated honest citizens like criminals, and as a result of this terrible strategy, the real criminals went unpunished. President Javier Milei instructed the economic team to implement what we have called ‘The Historic Reparation Plan for Argentine Savings.’
We need to change our mindset so that the State respects a basic truth: your dollars, your decision. What's yours is yours, not the State's.” — Source
This announcement is music to many a Libertarian’s ears and a complete departure from the status quo KYC/AML nightmare that governs most tax hells in this day and age.
Even within the first few months of his Presidency, it looked like Milei’s main goal would be to enter the OECD and get off the FATF grey list as soon as possible by starting stricter AML and KYC measures, combined with a forced registration with the CNV (SEC equivalent in Argentina) for crypto exchanges.
Some of these stricter measures were implemented, but in practice all this meant was that exchanges needed to be registered, and that they needed to collect user’s tax numbers, which could potentially serve as a future tax revenue database if needed. Apart from that, many of the required rules by the FATF were already in place, or they were even worse than needed in terms of consumer privacy and reporting requirements for businesses and financial institutions alike.
The only thing is overregulation has done, is push a vast portion of economic activity into the undeclared realms of the black market. This is why a large number of mattresses in Argentina is stuffed with a soft physical dollar cushioning instead of foam.
Historically, what Argentina has always done to try to reinsert these dollars back into the official economy through an official blanqueo — a voluntary affidavit of undeclared funds—, and have these evaders pay a small tax for entering that money into the banking system. The Milei government has already implemented one of these traditional tax amnesties last year, after which approximately $20 billion USD in savings and undeclared assets officially entered the system.
Today’s announcement flips that concept on its head, it’s a complete 180 compared to doing another blanqueo. Basically, para los de Boca: Argentina’s tax office will simply stop tracking private transactions, or care about the source of funds unless there is suspicion of criminal origin.
In a country like Argentina, where close to half the economy runs in the shadows and private savers have around 200 billion+ stuffed under their mattresses, the effects of this announcement and the details of the changes cannot be understated.
In the next section I’ll go over the changes one by one, which will also affect foreign non-resident real estate investors.