BUENOS AIRES -(Dow Jones)- Argentina's Senate passed a controversial bill Thursday establishing a moratorium on unpaid corporate taxes, and giving tax breaks to individuals who repatriate money held overseas.
The House of Representatives passed the bill last week and President Cristina Fernandez is expected to quickly sign the law.
The bill, which aims to boost the inflow of capital and increase tax collection ahead of an economic slowdown, has been criticized for being too lenient on those who have billions of dollars in undeclared funds in foreign accounts.
Critics say the law will allow people to repatriate money of questionable origin without explaining where it came from to the national tax agency, AFIP.
The bill would reduce taxes to between 1% and 8% from around 35% in some cases on the repatriation of funds from abroad. According to various estimates, Argentines have well over $100 billion invested in overseas accounts.
It also would establish a moratorium on taxes owed by companies before 2008. In some cases, the bill would wipe out lawsuits against these companies and reduce the amount of interest they have to pay on unpaid taxes. In other cases, the bill would cut the amount of taxes due by as much as 70%.
Another key aspect of the bill encourages companies to bring informally contracted workers - those who don't pay taxes - into the formal labor market.
This would allow companies to bring 10 employees into the formal labor market without having to pay fines or unpaid taxes on the workers. It also would allow the social security agency Anses to assume the workers have paid into the retirement system for five years. Proponents say this gives workers an incentive to pressure their employers to offer them formal, taxpaying contracts.
Government officials hope the bill will boost tax revenue at a time when many economists are forecasting it will decline rapidly next year due to the economic slowdown.
-By Shane Romig and Taos Turner, Dow Jones Newswires; 54-11-4590-2438; shane.romig@dowjones.com
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Publié le 18 Décembre 2008 Copyright © 2008 Dowjones