May 16, 2013
President Cristina Kirchner has devised a clever way to bring American dollars to the Argentine economy, thirsty for U.S. greenbacks. The government has offered a tax amnesty to Argentines that are “thought to hold tens of billions of dollars in undeclared U.S. dollars if they invest that money in energy and construction projects at home,” Economy Minister Hernan Lorenzino announced Tuesday. This tax amnesty will be the second in five years, with the last one in 2009 bringing $4 billion into government control.
The measure has been widely criticized for enabling foreign tax evasion and money laundering. Carlos Bastillo, managing partner of TEAS and director of Legal Affairs for the Financial Information Unit warned that with this measure may lead to increased dirty money and corruption in the country. “The state [won’t be able to] determine if the funds that a person declares as a product of tax evasion are not coming from drug trafficking, political corruption, embezzlement of public administration or any other crime,” explained Bastillo to La Nacion.
This tax amnesty could also be the tip of the iceberg to push Argentina onto a global blacklist, which is the common shorthand description for the Financial Action Task Force list of "Non-Cooperative Countries or Territories" (NCCTs). Being blacklisted could lead to financial countermeasures against Argentina. In 2011, FATF placed Argentina on its notorious “Grey List” of nations that have “failed to comply with international efforts to stem money laundering and financing of terrorism.”
Argentina’s withering economy and increased tax evasion, capital flight and drug trafficking appears to be worsening. This tax amnesty is another shameful example for the world to see that Argentina does not abide by international rule of law.