Argentina Enacts 'Fiscal Innocence' Law to Attract Undeclared Savings

Argentina Enacts 'Fiscal Innocence' Law

Argentina officially enacted Law 27.799, known as the 'fiscal innocence' reform, with its publication in the Official Gazette on January 2, 2026. The legislation, approved by Congress on December 26, 2025, and by the Senate on December 27, 2025, aims to encourage citizens to declare undeclared cash savings and bring them into the formal economy.

Objectives and Economic Context

The primary goal of Law 27.799 is to incentivize the declaration of an estimated $251 billion in undeclared cash savings, often referred to as 'dollars under the mattress.' This initiative is a key part of President Javier Milei's economic agenda, seeking to bolster Argentina's international reserves, which stood at approximately $41 billion on December 30, 2025, and to help meet over $19 billion in debt maturities in 2026. The International Monetary Fund (IMF) had previously urged the Argentine government to rebuild its reserves.

Key Provisions of the Reform

The 'fiscal innocence' law introduces several significant changes to the country's tax and penal regimes:

• Increased Criminal Evasion Thresholds: The minimum amount required to trigger a criminal investigation for simple tax evasion has been raised from $1.5 million pesos to $100 million pesos (approximately US$68,000 to US$69,000). For aggravated evasion, the threshold increases from $15 million pesos to $1 billion pesos.
• Shortened Statute of Limitations: The period for the statute of limitations on tax debts has been reduced from five years to three years.
• 'Pay-First' Exit Mechanism: Taxpayers can avoid criminal action if they fully settle their outstanding tax obligations before a criminal complaint is officially filed. This benefit is generally available once per person or entity. If a complaint has already been filed, it can be withdrawn upon payment of the debt, accrued interest, and an additional 50% fine.
• Simplified Income Tax Regime: A new regime has been established for taxpayers with income exclusively of Argentine origin and assets up to 10 billion pesos. Participants in this regime will be 'shielded for life,' with their taxes calculated solely on declared income, and their spending or asset changes will not be subject to monitoring.
• Presumption of Innocence: The law shifts the tax system's approach from a presumption of taxpayer guilt to a presumption of innocence, requiring the state to demonstrate irregularities before imposing sanctions or criminal prosecutions.
• Annual Updates: To counteract the effects of inflation, key monetary thresholds will be updated annually using the UVA index, starting from January 1, 2027.

Economy Minister Luis Caputo has urged banks to accept deposits under the new framework and advised citizens to utilize the state-owned Banco Nación if private lenders demand excessive documentation. It is important to note that public officials who have held positions in the last 10 years are excluded from participating in this regime.

Expected Impact and Concerns

The Milei administration hopes the 'fiscal innocence' law will significantly boost investment, deepen capital markets, and formalize a substantial portion of the economy that currently operates outside official channels due to historical high inflation and currency controls. However, the reform has also drawn criticism, with opponents raising concerns about potential risks of money laundering.