Switzerland approves banking information sharing agreement with Argentina.
The agreement that comes into effect next year will make it easier for AFIP, the Argentine revenue agency, to locate evaders.
Starting next year, Argentina will be able to demand fiscal and financial information about its citizens from Switzerland as part of a a wider agreement signed between both countries to prevent double taxation. Switzerland finished ratifying the agreement yesterday, which had already been approved by the Argentine Congress. The new text puts an end to the agreement vacuum between both countries and gives the AFIP tax bureau a key tool to tackle tax evasion. Argentines are unoficially estimated to hold some US$400 billion in tax havens.
The agreement exempts Swiss and Argentine companies from paying several key taxes, including income tax and personal property tax in the two countries at the same time. Argentina is the second most important investment destination in Latin America for Swiss companies at some 5.7 billion euros per year.
“It’s the first time Argentina can sign an agreement like this. We worked a lot for it to be approved in Congress quickly since it allows us to strengthen the commercial relationships between the two countries,” AFIP head Ricardo Echegaray said yesterday in a meeting with the Swiss Ambassador in Argentina, Hanspeter Mock.
The exchange won’t be automatic and information can only be requested once an investigation has been launched by the judiciary. The deal, moreover, won’t be retroactive so it shouldn’t have any effect on the HSBC tax evasion scandal that is currently being discussed in Congress; but it will help to get information from current account holders. Argentina charged HSBC last year with aiding more than 4,000 Argentine clients evade over US$3 billion taxes by stashing their money in secret Swiss bank accounts at HSBC.
Tax experts anticipate that there will be a large number of information requests filed by AFIP starting in January. But if these requests do not have enough legal backing, Switzerland can reject it. That happened many times with Uruguay, a country with which AFIP signed a similar agreement.
In the last few years, AFIP has sealed numerous double taxation agreements, signing the last one with Spain in 2014, as well as having subscribed to an agreement with the OECD, which allows it to be part of a 35-country network that can exchange relevant fiscal information.
At: http://buenosairesherald.com/article/201978/switzerland-approves-argentine-tax-deal
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Over the last 12 years, Argentina achieved what had previously been thought hopeless: a real (though not total) mitigation of tax evasion, which in most years had cost federal coffers around half their revenues. Of course, if Macri takes office it'll be party time again for tax cheats; tax laws (including this key agreement) will simply cease to be enforced.
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