Fiscal Innocence Law II: Key Aspects of the Reform

The new law approved by the Argentine Congress introduced several amendments we discuss below.

1. Amendments to Tax Procedure Law

The circumstances that make a “significant discrepancy,” which preclude application of the reduced three-year statute of limitations available to compliant taxpayers, have been expanded and redefined. In particular,

1. 1. the 15% threshold established in the first paragraph of article 56 will now be calculated on the basis of the assessed tax, instead of the tax payable;
   2. an adjustment exceeding the threshold established for the offense of simple tax evasion may result not only in an increase in the assessed tax but also in a reduction of tax loss carryforwards; and
   3. the tax authority challenged amounts improperly credited against the tax liability—including withholdings, collection and advance payments, regardless of the amount challenged—will also constitute a significant discrepancy.

The new law reduces the formal fines in articles 38 and 39 (and the unnumbered articles following them) by 25% when the offender qualifies as a micro, small, or medium-sized enterprise, or when the taxpayer is an individual, undivided estate, or non-profit that does not qualify as a Federal Large Taxpayer.

2. Amendments to the Optional Simplified Income Tax Regime  

The income and asset thresholds that previously restricted access to the regime have been eliminated. Accordingly, all individuals and undivided estates resident in Argentina may opt for this filing method if they maintained Argentine tax residency throughout the fiscal period for which the option was exercised.^[1]

The law clarifies that Federal Large Taxpayers and public officials included in article 38 bis^[2] may enrol to or remain in the regime solely for purposes of filing the tax return and paying the corresponding tax, without access to the benefits and other effects granted to taxpayers included in the regime.

The law incorporates the requirement—previously established only by the regulatory decree—to use payment methods authorized by the Argentine Central Bank (BCRA) and the Argentine Securities Commission (CNV) to conduct transactions. Compliance with this requirement may be verified at either the origin or destination of the funds and will be deemed satisfied in the case of cash payments made in connection with public deeds involving real property rights.

The law also determines December 31, 2027, to be the deadline to disclose such funds. For Personal Assets Tax purposes, those funds will be deemed incorporated into the taxpayer’s assets as of the date on which the relevant transaction is completed.

The circumstances constituting a “significant discrepancy” that may result in the loss of the benefits under the regime have also been expanded and redefined, in line with the amendments regarding the statute of limitations. However, the Law clarifies that the significant discrepancy referred to in article 40(i) of Law 27799—an adjustment equal to at least 15%—will not be deemed to exist when the assessed difference does not exceed a minimum threshold equal to 5% of the amount established for the offense of simple tax evasion. 

New rules have also been introduced to determine when there is a significant discrepancy.

First, any difference between the original simplified tax return and an amended return will be disregarded, provided that the amended return is filed by the taxpayer within 15 days after notice of the administrative tax assessment under article 14 or the ex officio tax assessment in article 17 (both of Tax Procedure Law). The resulting tax balance, together with accrued interest, is regularized. Accordingly, taxpayers who amend their returns and settle the resulting liability will retain the benefits under the regime. 

Second, until December 31, 2027, the law establishes that the presumptions relating to unexplained increases in net worth and bank deposits exceeding the sales or income reported for the relevant period, provided for in article 18(g) and (h) of Tax Procedure Law, will not apply. The Law expressly provides that the burden of proof rests exclusively with tax authority.

The new law further provides that, if an income tax assessment challenging the tax return is later annulled, revoked, or otherwise set aside by a final ruling in the taxpayer's favor, the benefits under the regime will be fully reinstated. In such cases, the tax authority must refund any amounts paid, together with the applicable interest, within 45 business days following notice of the decision.

Finally, the Law clarifies that enrolment in the regime does not affect the validity of audits, reviews, or proceedings initiated before the date on which the election is exercised. However, taxpayers who regularize the differences determined by the tax authority before joining the regime will be exempt from penalties for omission or tax fraud related to those adjustments.

3. Special Fine Reduction Regime

The new law establishes a special regime providing for a 50% reduction in fines for formal violations under the Tax Procedure Law imposed on micro, small, or medium-sized enterprises, individuals, undivided estates, or non-profit entities that do not qualify as Federal Large Taxpayers, if the violations were committed before the Law entered into force, the fines remain unpaid, and relate to obligations that became due following the enactment of Law 27799.