The government has already started the mechanism that, as of January 1, will oblige savers and investors of all sizes to pay the Income Tax. Both Fixed Term Deposits and Investments in Bonds and Mutual Funds will be taxed at a rate of 5% on profits, if the positions are in US dollars, or 15 if they are in local currency. The non-taxable minimum for this type of earnings will be just over $ 66,000. It is the second installment of the tax reform application.
The Secretary of Public Revenue, headed by Andrés Edelstein, has already submitted a bill to regulate Income Tax to its website. There, accountants and professionals of the economic sciences will have space to make observations and propose changes. The decree must be sanctioned before the end of the year, so that the Federal Public Revenue Administration (Afip) issues the resolutions that make the new provisions operational.
The first part of this tax began to be applied earlier this year. This is the rate that affected the financial income of non-residents. Hurried by the opposition, the government of Mauricio Macri wanted to give a progressive image. He advanced with the tax that touched the Lebac that he issued at the Central Bank. The effect was a stampede of foreign investors who stepped in to take advantage of the high yields offered by the cards combined with a quiet dollar. So the dollar price that happened in just over a month, from $ 20 to $ 42, exploded.
The Financial Income Tax will cause a strong discomfort between investors and savers, a political cost that will not be offset by the efficiency of the collection. Daniel Vicien, commercial director of Common Investment Funds (FCI) Balanz, estimated that this market segment will barely contribute to the treasury by about $ 200 million. The analyst explained that "the total amount of mutual funds in the country totals about $ 570,000 million." As the only investments that will be exempt according to the regulations will be the shares of Argentine companies, the FCI of the local private newspapers will not be taxed. The problem that arises is how to determine when a fund is from local Argentine stocks, since most combine different investments in their portfolios. The draft decree states that they must have at least 75% of their underlying assets in Argentine stock. This ratio may fall because of the portfolio movement, but not more than 30 days a year. Vicien explained that out of total managed funds, only $ 20 billion is in local equity. "This means that the $ 550 billion will be reached," Balanz's director estimated that this group of FCI, whose portfolios are comprised of fixed-income securities and government bonds in the first 10 months of this year, have accumulated revenues of $ 156 billion. "If the 5% rate is applied, they will pay $ 7.8 billion, just over $ 200 million." But the manager pointed out that since the tax is paid at the time of the redemption of funds, if an investor decides keep your money at FCI, it does not pay taxes.
The other question to be discerned is how Afip will finally determine that the Financial Revenue is paid. It can be organized that banks act as retention agents, especially on fixed terms that are easier to determine. But what happens in the case of more sophisticated investors, who may have their capital invested in different instruments, some of which in a given period may lose and others have positive returns.
There they assume that Afip could determine that those achieved by the sworn statements of the tax file. "As an FCI administrator can determine if your customer exceeds the non-taxable minimum," explained Vicien. Above all, if the person had other types of investments in a bank.
Another point to consider. The ADRs are stock certificates of Argentine companies listed on the New York Stock Exchange. These will pay the financial income. But it can happen that some investor wants to avoid tax. When the company pays its dividends, some may sell the certificate in the United States and buy the corresponding local share. But that was already ruled out. ADR sales and the move to local stocks will also be taxed.