Argentina OKs allowing undeclared savings into financial system
BUENOS AIRES, Jan. 2 (UPI) — Argentina’s government has enacted the so-called Fiscal Innocence Law, which changes tax evasion thresholds and seeks to encourage declaring and depositing undeclared U.S. dollar savings, commonly known locally as “dollars under the mattress,” into the formal financial system.
Official data show Argentines held about $254 billion outside the banking system as of September, slightly below the $256.5 billion reported at the end of 2023.
The phenomenon reflects decades of mistrust in the financial system after repeated economic crises, bank account freezes and successive currency devaluations. Under previous administrations, the volume of undeclared dollars grew sharply amid restrictions on access to the official foreign exchange market.
The initiative is part of President Javier Milei’s economic agenda. It aims to bring undeclared savings back into the formal economy, broaden the tax base and support economic activity.
The law introduces two main changes.
First, it seeks to protect taxpayers by shifting the legal standard from “guilty until proven innocent” to “innocent until proven guilty.”
Second, it simplifies the tax system by sharply raising the thresholds for pursuing tax evasion, which had not been updated for years. Simple tax evasion will now be investigated starting at $100,000, up from about $1,500, while aggravated tax evasion will apply from $1 million, compared with a previous threshold of about $15,000.
The reform also shortens the statute of limitations for tax crimes from five years to three. Taxpayers who receive a notice of irregularities will be able to normalize their situation by paying what they owe without facing criminal penalties.
The government stressed that the measure is not a tax amnesty, as individuals still must pay taxes owed on previously undeclared income.
“This law is probably one of the most important in Argentina’s recent history,” said Manuel Adorni, the government’s chief spokesman, during a press briefing. He said the reform overturns a legal paradigm in place for more than a century.
“Instead of being treated as suspects, all citizens are presumed innocent until the courts prove otherwise,” Adorni said.
He added that bringing these funds into the formal system could boost investment and deepen capital markets.
Private sector credit in Argentina currently amounts to about 9% of gross domestic product, well below the regional average, which ranges between 60% and 120%. The new law, Adorni said, creates an opportunity to channel savings into investment projects.
Economist Elena Alonso, co-founder and chief executive of Emerald Capital Global, told UPI the reform represents a profound shift in the relationship between the state and taxpayers.
“The core idea is to stop treating everyone as a suspect by default and move to a system where people are considered compliant unless the tax authority proves otherwise,” Alonso said.
Previously, she said, the system placed the burden on taxpayers to prove they had done nothing wrong even in the absence of evidence.
“This does not mean taxes will go unpaid or debts will be forgiven,” Alonso said. “It simply means wrongdoing must be proven first and only then can the state make a claim.”
She said the change would lead to more targeted requests for clarification, focused on proven cases rather than minor or formal errors.
For citizens, Alonso said, the benefits include greater predictability, less fear of administrative mistakes and a more balanced relationship with the state. “That also encourages compliance because the system feels fairer,” she said.
