Argentina Intends to Bestow Amnesty on Undeclared Assets

President Mauricio Macri announced that Argentines holding undeclared assets or cash in overseas accounts could bring it back to Argentina without legal consequences, according to The Wall Street Journal. The government aims to tax offshore money to fund pensions and other programs. Analysts estimate that over $500 billion in Argentine assets remain in overseas accounts, and incoming funds would be taxed anywhere from 0% to 15%.

President Mauricio Macri announced that Argentines holding undeclared assets or cash in overseas accounts could bring it back to Argentina without legal consequences, according to The Wall Street Journal. The government aims to tax offshore money to fund pensions and other programs. Analysts estimate that over $500 billion in Argentine assets remain in overseas accounts, and incoming funds would be taxed anywhere from 0% to 15%.

Amnesty agreements is nothing new in Argentina, but leaders claim that the most recent repatriation drive is different because other nations have agreed to share financial information with Argentina, which is why officials are giving citizens some leeway in declaring all assets before time runs out.

In addition to offshore holdings, many citizens store money in their private homes. Regardless of the new proposal, policymakers will have a tough time convincing citizens that amnesty is genuine due to the public’s lack of faith in financial institutions. The government has a history of meddling with personal finances, such as converting personal savings into public bonds and changing dollar-based deposits into pesos.

Such interference has angered the public to the point of rioting, but others responded by simply storing money in foreign accounts. Further, Macri’s credibility is a bit undermined, as the Panama Papers revealed that the president retains offshore holdings himself. With that, Macri’s liberalized and pro-business policies have more credibility than the previous president.

Macri’s predecessor, President Cristina Fernandez de Kirchner, was an interventionist when managing the economy, regulating the nation’s currency while turning away many investors in the process.

Kirchner was indicted in May on charges of manipulating futures contracts during her tenure in order to inflate the value of Argentina’s economy. Macri got into office in late 2015 on a promise of reform and undoing most of Kirchner’s leftist policies. He not only must convince overseas investors that his country is a safe place to invest, but also Argentines who are deeply skeptical of the banking system.

The president has sought to regain trust from the public and business community through such measures as lowering taxes, working with creditors, and uplifting currency restrictions. Macri wishes to convey that Argentina is open for business while using undeclared funds to instill reforms and fund programs needed to help seniors and the poor.

Authorities hope to collect at least $60 billion in repatriated money and assets. Macri is a rightist politician, but does not intend to undo the current social programs already in place. He is going to need additional money for people suffering in a downtrodden economy, however, and the amnesty drive is a crucial step that could help fill state coffers if passed. Congress must approve the measure before it becomes law.