Yesterday marked the end of the first phase of the 2016-17 blanqueo, the government’s tax amnesty plan that aims to encourage Argentines to repatriate assets currently stashed outside the country’s financial system. Finance Minister Alfonso Prat-Gay announced today that the first stage, for cash deposits, brought nearly US$7bn back into the country.
The government will keep 10% of the total deposits, some US$700m, as part of the plan. Prat-Gay believes that the programme is on track to meet the US$20bn target that was publicly announced. In private, the government is hopeful that it will significantly exceed that figure.
The blanqueo programme is a “one-time” opportunity for Argentines with undeclared and untaxed assets to put their money back into Argentine banks while only paying a single, special tax rate. This is the country’s third tax amnesty programme since 2009. The most recent, in 2013, brought slightly over US$2.6bn into the country’s banks. The next phases of the 2016-17 programme will give Argentine citizens a chance to repatriate assets held in foreign deposit accounts and in real estate.
To participate in the programme, individuals opened and then deposited cash into special accounts. Assets in these accounts will be frozen for the next year, except for purchases of registered goods. Since October, 160,000 accounts have been opened to participate in the blanqueo. As of last week, however, at least 30% of those had yet to receive funding. It is unclear how many accounts remained empty when the programme ended yesterday.
The tax-amnesty programme is part of the Macri administration’s larger plan to reduce informality and tax-evasion in the Argentine economy. However, the blanqueo received criticism as it forgives the unpaid taxes of Argentines who have enough wealth to store significant assets abroad and out of sight of the financial system.
The government has said that it will use the money raised to pay debts still owed to retirees who did not receive their pensions following the 2001-2002 crisis.