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Report: Argentine government considers new tax on cash deposits

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Report: Argentine government considers new tax on cash deposits

Argentina's Finance Ministry is considering eliminating a 1.2% tax on checks and replacing it with a 2% tax on bank cash deposits, El Cronista reported, citing sources familiar with the matter.

Recently appointed Finance Minister Nicolás Dujovne reportedly asked local bank executives in 2016 to come up with a proposal that would reduce the tax on checks while maintaining or increasing revenues for the state.

To partially compensate large depositors, such as retailers, banks have proposed that the tax on debit card purchases could be reduced to 0.5% from 1.5%.

However, the Finance Ministry is reportedly concerned that a tax on cash deposits would encourage more Argentines to avoid banks by depositing funds at institutions in the informal market, which would result in lower tax revenue for the state.

The government is thinking about launching the tax as part of a package of new measures during 2017, but it is seeking assurance from the banking sector that the measure will increase so-called bankarization and tax revenues, the report said.