Fiscal innocence: how Mileis no-questions-asked law encouraging savers to use their stashed dollars works

President Javier Milei scored two wins on Friday: the congressional approval of his first budget bill, and the creation of a new law that applies the principle of innocence to tax evasion, with the goal of allowing Argentines to use their savings — especially dollars — with less supervision from authorities. The law, known as “fiscal innocence,” modifies the Argentine tax system, loosening controls and raising the threshold of how much money Argentines can spend without justifying where the funds came from. One of its main goals is to encourage people to use the dollars they keep “under the mattress” — a term used to describe the money that is kept outside the bank system and that, therefore, is not part of the country’s cash flow. “Although the Argentine judiciary system states that we are all innocent until proven guilty, regarding tax issues we were all guilty until proven innocent,” Milei said in an interview with Radio Mitre on Saturday. In an X post after the law passed, the president wrote that the new legislation is “revolutionary” and that it will “bring back the freedom” to use savings. “We are protecting Argentines’ savings forever. No government that comes after us will be able to rob the savings of good citizens.” A new simplified income tax regime was created as part of the law. It will allow taxpayers who sign up to the scheme to no longer have to periodically inform authorities what their assets are, reducing bureaucratic steps. Their taxes will be calculated on the basis of their formal earnings.   The regime only applies to residents with income exclusively of Argentine origin. Economy Minister Luis Caputo said that, with the new law, people can make a dollar deposit in their bank and start using the money immediately and that the only requirement banks should ask for is to be registered in the simplified income tax regime.  “If your bank starts asking for more information, don’t waste your time,” he wrote on X, recommending that people go to the state-owned Banco Nación instead. The law has raised concerns over the possibility that it could be used to commit crimes such as tax evasion, money laundering and even drug-trafficking without the state stopping them. Months ago, when the government filed the bill, Milei said that he did not care how Argentines use their money and where it comes from, and that if there is an issue it should be solved by the judiciary, adding that the criminal sphere should be completely separate from fiscal controls.  Tax evaders, he also said, “are heroes, not criminals”, a phrase the anarcho-capitalist has repeated often, to signal his criticism of the high level of taxation Argentina has had in the past, to finance its constant fiscal deficit. How the new regime works The new fiscal law allows Argentines to use up to close to US$70,000 without having to declare its origins to the national tax agency ARCA. Up until now, taxpayers were considered to be engaging in tax evasion if they were unable to prove the origin of any expense above US$1,000, a number the government considered outdated.  Now, residents will start being investigated when they make unjustified money movements starting at AR$100 million (almost US$68,000). Undeclared movements of AR$1 billion (US$680,000) or more are now considered to be aggravated tax evasion, which carries a potential jail time of up to nine years. With the new law, ARCA will also pardon those who cancel their tax debt and interests, meaning they will not file a criminal complaint against them. This benefit can only be used one time per person. If a complaint has already been filed but the taxpayer pays the debt, interests and an additional 50% fine, the authorities will remove the complaint. The statute of limitations for tax debts was also lowered from five to three years, meaning those who don’t pay will be let off the hook quicker. If registered in the new simplified income tax regime, people with annual earnings below AR$1 billion (US$680,000) and assets below AR$10,000 billion (US$6.8 million) will not be considered large taxpayers and ARCA will no longer look into their spendings or their assets.  The agency will only take into account the income the taxpayer informs and their deductible spendings to calculate how much they have to pay for their taxes. This means that those taxpayers will be able to buy assets or make large money transfers without being obligated to inform the nature of those movements to the tax agency or bank. “Now, you will be able to spend all you want and no one will be controlling you or collecting taxes based on your declared income,” Milei told Radio Mitre.