Argentina passed wealth tax to fund Covid relief

On December 4, Argentina passed a one-off wealth tax with the goal of mitigating the effects of the pandemic. The Draft Law of solidarity and extraordinary contribution (Proyecto de Ley de aporte solidario y extraordinario para ayudar a morigerar los efectos de la pandemia) was presented on August 31, 2020, and, with its entrz into force it will impact roughly 12.000 citizens with assets over ARS 200 million (USD 2.7 million).

The lowest tax rate has been set at 2%, rising to 3.5% for Argentinian-based assets of more than ARS 3,000 million, to a maximum of 5.25% for those who hold assets in other countries.

The tax applies to:

  • residents in the country, for all of their assets in the country and abroad;
  • residents abroad for all of their assets in the country; and
  • residents abroad who are of Argentine nationality and are located in “non-cooperating countries or jurisdictions with low taxation”, for all of their assets in the country and abroad.

The Law, which has been justified by the “extraordinary circumstances” brought about by the global pandemic, has nonetheless drawn much criticism as it seems to be in conflict with Argentina’s tax residency rules and the definition of residence agreed by Argentina and the countries with which it has double taxation agreements.