Argentina caps monthly dollar buy at US$2,000

BUENOS AIRES

Argentina’s government has set a US$2,000 monthly cap on dollar buying, as it seeks to arrest a three-year decline in hard currency reserves and narrow the gap in the black market.

Presidential Chief of Staff Jorge Capitanich announced the limit in a televised press conference with Chief Tax Collector Ricardo Echegaray, following a decision on Friday to lift a two-year ban on legally buying dollars for savings.

Capitanich said taxpayers earning at least 7,200 pesos (US$1,005) a month can request authorization to buy dollars in line with their incomes, effective Monday.

The federal tax bureau, known as AFIP, will take the requests over its website and allow purchases equivalent to 20% of the requester’s average annual income up to a maximum of $2,000, he added. The taxpayer must have his tax filings and payments up to date.

Capitanich explained that once a purchase is approved by AFIP, the individual will get a 72-hour permission certificate that they can present at a bank to buy dollars at the official exchange rate. The official rate was trading at 8 pesos per dollar on the wholesale market Monday.

The dollar buyers must also pay a withholding tax of 20% that can later be credited against their annual income or personal wealth taxes, Capitanich said.

The only way to avoid the 20% tax is to deposit the purchased dollars in a savings or time-deposit account for at least 365 days, after which the dollars can be withdrawn without paying the tax, he added.

In those cases, “the withholding tax will be zero,” he said.

He and Echegaray said that people are free to withdraw the funds sooner than that, but if they do they must pay the tax.

The government lifted the prohibition on buying dollars for savings on Friday after allowing the peso to plunge nearly 18% against the dollar in a week, the largest drop since the country ended a one-for-one peg between the peso and the dollar that ran from 1991 to 2002.

The allowance to buy dollars is the first reversal in capital controls that the government put in place in 2011 to contain ballooning capital flight and protect the Central Bank’s reserves.  

The government cannot readily borrow on the global financial markets since it defaulted on a US$100 billion debt in 2001. It is now fully reliant on international reserves for paying the national debt and imports, including much-needed energy supplies.

By Charles Newbe

englishnews@aa.com.tr