A new version of the “foreign exchange clamp”

The Argentine tax agency and the Central Bank issued today two norms which establish a new version of the “foreign exchange clump”, that this time pretends to be more transparent and effective than its last version.

Any individual could buy foreign currency for saving purposes subject to a floor and a ceiling: 1) only those who earn at least 7.200 pesos would be entitled to purchase and 2) the maximum amount is 2.000 dollars, independent from the salary or income.

The floor excludes those with lower incomes and those who for different reasons are not part of the formal labor market.

The maximum amount is 2000 dollars (on a monthly basis), some sort of foreign exchange “corralito” that limits the purchasing right of those with higher income.

Under that ceiling, the maximum amount that could be bought is the equivalent to 20% of the monthly income, either for employees or those rendering services independently. A percentage that is arbitrary and challengeable.

The purchase should take place via a financial entity (by means of debit or electronic transfer) who must charge on behalf of the tax agency a “perception” equivalent to 20% of the amount of the transaction.

To that end, the financial entity should request an affidavit from the purchaser and the applicable exchange rate would be that from the prior banking date.

The “perception” could be applied as an advance for the income tax or the property tax for the following calendar year.

It is not applicable if the foreign currency is deposited in a banking account for at least 365 days. If it is retired prior to that term the financial entity should charge the “perception”, which shall mean a hazardous follow apparently not been taken into account.

It is a complex regulatory labyrinth with floors, ceilings, maximums and minimums that creates at least two new exchange rates: one with the additional 20% rate and the other without that percentage, at least temporarily, for those who leave the foreign currency deposited at a bank for at least 365 days.

Arbitrariness in the means and confusion in the ends. Those with lower income are excluded, those with higher ones are limited and ceilings are establish for those that form part of the privileged universe that will be entitled to purchase foreign currency.

The unconstitutionality of these norms is almost an anecdote (the legality principle forbids, among other matters, the analogical application of a tax to new circumstances not provided in the law) but it must be highlighted that notwithstanding in times characterized by the lack of the rule of law.