A US law sheds light on undeclared Argentine accounts

Since Alfonso Prat Gay pioneered the most successful money laundering in Argentine history, AFIP has been engaged in tracing the accounts of the Argentines in the United States. Sergio Massa has adopted the approach starting from the assumption that there are $ 100 billion undeclared. And he wants to use the Foreign Account Tax Compliance Act known by its acronym in English as FACTA.

The minister understands that this is a complex process. In their environment they sense that it depends on a direct political decision by the White House and they believe that Massa will not stop until he catches up with him, even if that means, in case Biden concedes, another whitewashing so as not to punish backwards.

With a life dedicated to the study of tax systems, Juan Carlos Gómez Sabaini, who died in March 2021, investigated what FACTA means, in a work published by CECE on the challenges of international taxation.

Here are their main conclusions:

• The Foreign Account Tax Compliance Act (FATCA) was passed by the United States Congress in 2010 and has been in effect since 2013. The aim is to combat a type of tax fraud that results in a loss of tax collection for the US Treasury every year. estimated at $ 100 billion.

• Through this regulation, all financial institutions based outside the United States are obligated toidentify and report on US citizens and residents who have deposits and investments.

• The FATCA law It affects taxpayers, financial companies and other countries. Establishes a 30% withholding tax on transfers made by the United States for income and other payments (passive income) from assets located overseas.

• In turn, if a foreign financial institution fails to sign an information exchange agreement with the IRS (the US AFIP), this body will impose a 30% withholding tax on payments from the US.

• When the FATCA law was published, the governments of the United Kingdom, France, Germany, Italy and Spain initiated rapprochement with the United States to prevent tax evasion, but highlighting the difficulties, legal and practical, implement the FATCA regime.

• The financial sectors of these countries have mentioned enormous legal difficulties that would entail complying with the obligation to provide information directly to the US Treasury, mainly from the point of view of national and European Union legislation, on the protection of personal data.

• Argentina was no exception and its major financial sector regulators have established a number of procedures to facilitate the identification of account holders covered by the FATCA standard.

• This is the case of the Central Bank of the Argentine Republic (BCRA), the National Securities Commission (CNV) and the National Insurance Superintendency (SSN), leaving the exchange of information on these accounts subject to regulation by the AFIP.

• Nail 1,170 Argentine financial sector institutions, including banks and financial institutions, brokerage companies, trusts, pension insurance companies and mutual investment funds, have been registered within the FATCA framework obtaining their GIIN number (“Global Intermediary Identification Number”).

• This decision to comply with FATCA disclosure obligations is based on commercial, financial and reputational objectives since, as indicated, through this procedure and despite the operational costs it implies, this allows these entities to avoid a 30% withholding tax on your income. various (and that of your customers) are derived from operations originating in the United States.