Presumed Innocent
Tax Innocence 2.0 and the rental income exemption: Argentina keeps courting its mattress dollars
Welcome Avatar! Argentina's Tax Innocence regime is barely three months old and already getting a sequel: a reform package was sent to Congress that strips the entry requirements, ties ARCA's hands even tighter, and forgives old fines, all in the hope of luring more mattress dollars out of their hiding spots and into the formal economy.
The original Tax Innocence regime is a mechanism that seeks to legally “shield” people who incorporate their “mattress dollars” into the formal financial system.
The reform package makes it even broader by removing the income and wealth caps entirely, so nearly anyone can join the simplified Ganancias regime, with only the largest national taxpayers locked out of the benefits. ARCA’s hands also get tied further: the agency will only be allowed to build a case on what you declared, what already sits in its own systems, or what third parties reported.
The previous Tax Innocence law is barely three months old, but Caputo and Co. clearly want to make it even easier for people to spend their undeclared funds without the fiscal authority breathing down their necks. The initiative filed in February was discussed in detail in The Age of Tax Innocence, and the modifications proposed by the Milei government this week will make the regime even more flexible.
All this comes on top of the initial blanqueo or tax amnesty, which made it possible to “launder” up to 100k of undeclared funds at a rate of 0% — anything over 100k would have a 5% rate—, which was enacted in Q4 2024.
Needless to say that the search for saving dollars continues, as a primary vehicle for local investment into the Argentine economy as FDI still remains relatively low outside of RIGI sectors.
Find the full breakdown of Tax Innocence 2.0 and whether cash real estate deals are now living on borrowed time below.