MercoPress. South Atlantic News Agency

Argentina promulgates tax data exchange bill, but Uruguay still has to vote it

The “Old City” and Punta del Este, havens for Argentine investors

The Argentine government on Wednesday promulgated the tax agreement reached with Uruguay geared to lower fiscal evasion and elusion plus avoiding double taxing for residents from the neighbouring countries.

The bill, published Wednesday in the Argentine Official Gazette allows both governments to exchange fiscal information on the origin and nature of investments and other assets of Argentines and Uruguayans in each country.

However the bill which was approved by the Argentine congress last 8 August still has to be voted by the Uruguayan parliament and currently is in the Senate. Last week Uruguay’s Finance minister Fernando Alonso visited the Legislative to request a quick discussion and approval of the bill.

However some lawmakers are considering a possible delay of the bill until Argentina unlocks many of the bilateral issues which remain in dispute between the two countries, particularly referred to the access canals to the shared River Plate.

The bilateral agreement reached last April in Colonia, Uruguay between Presidents Jose Mujica and Cristina Fernandez means the end of secrecy for bank accounts in the Uruguayan financial system which will no longer protect Argentines who opted to have their savings or investments in Uruguay.

For decades Uruguay was labelled a fiscal paradise attracting many Argentine savings fearful of the volatility of their economy and their currency. Uruguay was forced to be more flexible and negotiate tax info exchange agreements with other countries by the OECD Organization for Economic Cooperation and Development which had the country in a grey list of offenders.

Argentina’s tax revenue office AFIP for decades had wanted to sign a tax information exchange agreement with Uruguay to combat fiscal evasion.

Under the bill each country can have access to the tax data of the other country but generated after the accord becomes effective, despite Argentina’s initial request that it should be retroactive.

For the case of the secret accounts only Uruguayan courts can order the lifting of such a condition on request from the local tax offices, for which sound evidence of alleged evasion or elusion must be presented.

According to central bank data at the end of last year Argentine residents had 2.3 billion dollars deposited in Uruguayan banks. Far greater values are invested in agriculture and real estate, particularly in the sea resort of Punta del Este, which in summer months is considered an “extension of Buenos Aires”.