Earnings: ARCA will only be able to audit the most recent sworn statement

The national government is promoting a deep change in the income tax regime, which will drastically limit the scope of audits by ARCA (Argentine Revenue Collection Agency). With the new bill presented this Thursday in Congress, the tax authority will only be able to review the last tax return filed by the taxpayer, which will serve as a "tax cap."

This measure is part of the new simplified income tax regime, and was officially presented by the head of ARCA, Juan Pazo, together with Congressman José Luis Espert. "We presume people's good faith and until ARCA determines that a taxpayer is lying, the tax return is presumed to be accurate," government officials explained.

Tax cap and new simplified regime

The bill establishes that the tax authority will no longer be able to review previous returns, even if the statute of limitations for the crime of tax evasion is reduced to three years.  This "tax cap" will only apply if the individual meets the requirements to join the new regime: annual income of up to $1,000 million and assets below $10,000 million. In addition, these parameters must have been verified in the two years prior to entering the regime.

The Executive clarified that the aim is to prevent "asset divestment" maneuvers and other forms of aggressive tax planning. ARCA may add additional requirements, such as verifying the origin of declared income.

Releasing effect and discrepancy criterion

The bill also introduces the possibility for taxpayers who accept ARCA's proposed assessment and pay on time to be released from all tax liability for that period. However, this protection will not be valid if income is omitted, improper deductions are included, or fraudulent invoices are used.

Another novel point is the "significant discrepancy" criterion:  if the declared amount differs by at least 15% from the data held by ARCA, an audit process may be initiated.

Unique opportunity to avoid criminal proceedings

The legal text also opens a "one-time window" for taxpayers with tax debts to avoid criminal charges by paying the full amount, with interest, before ARCA proceeds judicially. If the complaint has already been filed, a second chance will be offered: pay the debt plus interest and an additional 50%, to definitively close the criminal case.

"The main objective of the law is to change the paradigm of the Argentine tax regime: to move from a persecutory regime to a revenue-collecting one," officials at Casa Rosada emphasized.

Finally, the bill raises the threshold for tax evasion to be considered a criminal offense: in the case of simple evasion, the minimum amount will become $100 million. According to ARCA data, out of 6,652 current criminal complaints, only 198 would remain under the new parameters.