The Argentine government kickstarted a plan to lower taxes and loosen reporting requirements for everyday transactions, urging people to use the U.S. dollars they hide “under the mattress.” 

The project is called “Historic Reparation for Argentines’ Savings,” and it was announced on Thursday by presidential spokesman Manuel Adorni, Economy Minister Luis Caputo, and Central Bank head Santiago Bausili. It will consist of two stages: a decree, which will be issued May 23, and a bill that will be sent to Congress, with a date to be confirmed.

Critics have said the measures could incentivize money laundering and tax evasion since Caputo and President Javier Milei first spoke about them earlier this month.

Used to combat sudden and steep devaluations of the peso, Argentines have historically saved in U.S. dollar bills. Authorities calculate that Argentines hold US$271 billion in cash, which the government expects to use to “remonetize” the economy.

“I don’t think it will entail too significant a supply in the short term in the market,” Gustavo Quintana, an analyst and broker for PR Corredores de Cambio, told the Herald. He added that the demand reduction could lower the exchange rates, but that it is still too early to make an assessment, as the fine print is still unknown.

The Argentine Bank Association (ADEBA, by its Spanish acronym) welcomed the measures, saying that they would eliminate “government requirements for unproductive but burdensome processes.” In a press release, the association, which groups the country’s major banks, added that “controls and resources will be focused only on risky operations.”

ADEBA’s president, Javier Bolzico, deemed the measures “relevant” and added that they “will contribute to strengthening the mutual trust between banks and their clients.”

Pilar Tavella, Director of Macro & Strategy Research of the Balanz brokerage firm, told the Herald that the measures could strengthen net reserves “although it does not seem to be the main goal of the announcement” since “the Central Bank is not making dollar purchases within the exchange rate band.”

Tavella, however, said that the monetary authority could grow its international presence as banks could increase their balances and use the funds as a backing for eventual debt placements.

What we know so far

Although some details remain unknown, the government published a communiqué listing the main measures. Argentina’s tax authority, the ARCA, will take down the following information requirements:

• Virtual wallets and debit and credit card operators had to report all purchases made by individuals using these means of payment. From now on, they will no longer have to be reported.
• Notaries will no longer have to report any transaction to ARCA.
• Car dealers will no longer have to report any purchase and sale of used vehicles.
• Building administrators will no longer have to report common expenses’ payments to ARCA.
• Real estate agents will no longer have to report to ARCA when properties are put on sale.
• From now on, utility and telephone providers will no longer be required to report consumption to ARCA.
• Banks will be prohibited from requesting affidavits of national taxes.
• The threshold for reporting financial operations will be changed as follows:

ARCA will also launch a simplified income tax regime. Before the announcement, Argentines had to file their returns and invoices for the year and sign an affidavit. From now on, based on all the information of the invoices and deductible expenses, the ARCA system will show every citizen how much they should pay, and they will be able to review and rebate the information. Moreover, the Central Bank will launch a new “Open Finance System” with the goal of simplifying credit access.