In search of dollars, Argentina takes action that could put the country on the path to becoming a ‘tax haven’

The lack of dollars is one of the pillars of the crisis in Argentina. And it was with this in mind that the government decided to take measures to attract investors — and money — to the country. To recap, the government headed by Javier Milei had already taken measures to make the multiple dollar quotes converge to just one.

This simplification of the exchange rate is one of many measures to attract foreign investors.

Now, the current Inspector General of Justice (IGJ) from Argentina, Daniel Viít, announced the removal of controls for the registration of foreign companies and “vehicle companies” — that is, companies formed to carry out some economic activity with specific purposes.

The announcement was made at a meeting with members of the Argentine-British Chamber (Brit-Cham), before the official publication of general resolution 10/2024.

Furthermore, the resolution opened space for companies offshore do not follow Argentine law — but have a similar registration to national companies.

In practice, this could be a path for Argentina to become a “fiscal paradise” — regions known for having low taxes and regulations, which are used, among other things, for tax evasion.

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Do you buy everything for dollars? Argentina’s “paradise”

The decision to deregulate the Argentine economy is one of Milei’s campaign promises, along with the dollarization of the country’s finances and the “implosion” of the Bank of the Argentine Republic (BCRA).

The loosening of the rules is in line with the president’s ultra-liberal vision. However, the decision is controversial, considering that the country could become a fertile ground for shell companies, used to launder money from international crime.

“Milei Plan” has been working, says government

However, as has already been said, the lack of dollars is one of the pillars of the crisis in the country. In November last year, the country’s international reserves reached US$20.9 billion. For comparison purposes, Brazil maintains approximately US$350 billion in hard currency.

But recently the neighboring country’s foreign exchange reserves grew to around US$28.2 billion after the surplus in January and February. Milei’s austerity policies were the main factor in improving public accounts, according to Economy Minister Luis Caputo.

New battles for the president of Argentina

Other proposals by Milei to clean up public accounts include downsizing the government machinery.

In about six days, the State Workers Association (ATE), one of the largest and most influential trade unions in the country, confirmed that more than 11 thousand public employees were fired, a number below the 15 thousand announced by the government.

Furthermore, Milei also confirmed that she will not renew contracts that expire on the last day of March. According to the presidency spokesperson, up to 55,000 contracts are being reviewed. Thus, the union centers have already scheduled new strikes for the coming days.

The country has already suffered from recent strikes against the president’s austerity plan and his measures, such as LeyÓmnibusO Necessity and Urgency Decree (DNU) and the Mayo Pact.