Echegaray and US Ambassador Mamet seal agreement to exchange trade information
It was supposed to be a simple tax agreement — high in protocol low in content — between Argentina and the United States.
But when US Ambassador Noah Mamet went to the AFIP tax bureau headquarters yesterday for what looked to be a photo-op he suddenly found himself on the receiving end of some chastising by chief taxman Ricardo Echegaray, who criticized the United States for its failure to exchange tax information with Argentina.
Echegaray called on the recently arrived ambassador to help reach “total transparency status” between the two countries.
Echegaray signed a memorandum of understanding with Mamet to re-start exchanging trade information between the two countries, which was once commonplace but stopped three years ago. The new deal will allow to identify financial transactions that could include money laundering, smuggling and overvaluation of goods.
“It’s a positive gesture of the US government to walk along the path toward transparency. Nevertheless, there’s an area still missing and that’s the fiscal exchange of information. Argentina has already done its part to start sharing the data and now we hope the US does the same,” Echegaray said yesterday alongside Mamet. “We want to put this issue on the ambassador’s agenda.”
Argentina and the United States are both signatories — along with more than 50 countries — to the Convention on Mutual Administrative Assistance in Tax Matters, which regulates information exchange between states regarding tax issues. It’s currently the most comprehensive instrument available for tax cooperation and exchange of information. Argentina has already implemented the convention but the United States has yet to do so pending congressional approval.
“We want to start working with the US on a reciprocal exchange in financial matters and reach total transparency status. AFIP has a significant database of Argentine tax payers, who are living in Argentina and abroad,” Echegaray said. “We were audited by the G20 on information exchange and obtained satisfactory results. I hope the US ambassador takes this information with him and puts it on the discussion table.”
Mamet, who spoke before Echegaray and in English, made no reference about the US implementing the convention or signing a bilateral tax deal with Argentina, which the AFIP hopes to implement in the near future.
“The US and Argentina are making an important commitment by entering into an agreement over trade transparency. It will help to detect money laundering and commercial fraud violation,” Mamet said. “There’s a need for information-sharing and collaboration as transnational criminal organization know no borders. The global law enforcement community must remain united.”
A bilateral agreement
While the US still has to ratify the multilateral convention, the other option for AFIP is to move forward with a bilateral fiscal information exchange with the United States. The tax bureau started negotiating one with the IRS after the US passed the Foreign Account Tax Compliance Act (FACTA) law, which requires foreign financial institutions to report to the US Internal Revenue Service (IRS) about their US clients.
“There’s no bilateral deal but there’s the multilateral convention, which the US signed but hasn’t implemented yet. Argentina did all its homework but the US hasn’t,” César Litvin, tax expert and head of the Argentine Tax Institute, told the Herald. “When the convention is implemented by the US, Argentina will be entitled to request information about bank accounts.”
The G5 states — Germany, France, Italy, Spain and the United Kingdom — conducted negotiations with the US to ensure that the FACTA law could be implemented reciprocally on the basis of an international agreement. But the same has not happened with other countries, which are required to sent fiscal data to the US without receiving any from it.
“There’s currently no fiscal information exchange deal between the US and Argentina. The US only signed a few with some key countries. In order to move forward with it, Argentina must seal a deal with the US to prevent double taxation,” Marcos Torassa, partner at Torassa & O’Donnell, told the Herald.
There are two main types of tax agreements that can be sealed with the United States. Under one model, financial institutions report information about US accounts to the tax authority of the partner country. That tax authority then provides the information to the US.
Under a different model, the financial institutions of a partner country report directly to the IRS, the US tax agency.
The US proposed years ago to sign an agreement that follows the first model, but Argentina insists it will only seal a deal if its reciprocal — meaning the AFIP will have access to data about Argentines in the US.
“We want to have a reciprocal relationship with the IRS and the United States so it has the ability and obligation to inform us about the bank accounts of Argentines abroad,” Echegaray said at a press conference last year.
buenosairesherald.com