Secrets of the AFIP bunker where US data on Argentines' accounts abroad will arrive

The room is completely locked and can only be entered with very specific biometric data, since the security level is much higher than in the rest of the offices of the Federal Administration of Public Revenue (AFIP). Very few people access this true hideout, and if someone tried without authorization, they would be discovered within seconds.

Almost no one knows where this office is located inside AFIP's massive central building in front of the Plaza de Mayo, where tax data from Argentines abroad is stored and encrypted according to international security standards.

In this regard, the Federal Director said, florence theater, He met at the United States Embassy with his representative in Argentina. Mark Stanley. Al-Marahi stated that he aspires to enhance information exchange and cooperation with that country “through best practices that allow the integration of more taxpayers and simplify tax administration,” and the ambassador emphasized “the importance that the United States attaches to transparency and information exchange.” “.

AFIP reported that during the meeting, they “analyzed the current situation of various bilateral agreements and agreements in place with a focus on the necessary measures to implement measures to achieve automatic exchange of information by FATCA next September.”

Every year AFIP receives tens of thousands of data on a server from countries with which it has signed bilateral agreements and also through the multilateral agreement sponsored by the Organization for Economic Co-operation and Development. When the countries participating in this multilateral agreement deposit information on September 30 of each year, the Argentine Treasury can only collect the data of its resident citizens from the server.

information Rebuilt the data exchange and processing process with qualified sources from AFIP and the banking sector.

This year, the cyber and financial challenge becomes much greater, because on September 30, all the data that the Internal Revenue Service (IRS) will provide with the accounts of Argentines in the United States will arrive on that mainframe.

On the same day, AFIP will also send to the IRS data of North American taxpayers with accounts in Argentina, in the context of the FATCA agreement that was signed. Sergio Massa Minister of Economy at the Treasury Janet Yellen.

Specific AFIP sources information The data must be encrypted in a special way, so that not even the head of the organization can access this information base. Starting October 1, the process of verifying identities and cross-referencing each individual taxpayer's sworn statements by the IRS and other foreign organizations will begin.

The US Congress passed the Foreign Account Tax Compliance Act (FATCA) in 2010 to prevent the evasion of tax obligations by US taxpayers with accounts in other countries. This is an automatic exchange mechanism – not individual or on-demand, like those that have been operating since 2018 – with the United States, and is a key area for AFIP to advance in the fight against evasion.

The IRS mission inspected the office in question in the same year to verify that all security measures were met and the AFIP passed the test. However, both the OECD and the IRS periodically check that these security levels are maintained, as the signed agreements contemplate the possibility of suspending them in the event of any information leakage. This “peer” review is an essential element to avoid leaks to third parties.

AFIP has already been able to detect evasion cases through other agreements in place, such as Spain, several tax havens and even with the United States, where the tax organization it leads. Florence Masrahi Gain access to data of Argentinians' properties in Miami and other famous cities in that country.

Based on this investigation, the Argentine Treasury requested broader and more robust information from the Tax Authority to supervise these taxpayers. He was also able to stop many operations through tax havens. Of course, it is not always easy to come to clear conclusions, because in some cases people with similar names or titles or incomplete information may appear. The statute of limitations for an investigation is not entirely in Treasury's favor.

The experts said information For this whole orchestra to function perfectly, the formal organizations controlling evasion must have the full cooperation of the banks.

For Argentine financial entities, the incentive is clear: if they do not comply with AFIP's request to hand over their database in the coming months so that AFIP can send it to Washington in September, that country's government will implement sanctions after September 9. /30, with 30% deducted from your income.

For this reason, ABA and Adeba received precise technical instructions last week from AFIP officials and began racing against time to meet the deadlines. This includes, among other tasks, informing clients that they will be subject to FATCA. Several entities with branches in Argentina have already announced this to their more sophisticated clients, with letters explaining how far the long arm of the IRS reaches the borders of any country that has an agreement with the United States.

Until now, Argentine banks have been sending information directly to the IRS; But from this year, AFIP, due to the bilateral agreement, will act as an intermediary, largely because there is an exception to bank secrecy to comply with FATCA.

The guide to doing this is the “Information System for Financial Accounts of Non-Resident Persons (CRS – Fatca)” passed to them by AFIP. In 30 pages, banks can reveal how they will proceed and what information they must provide to the Treasury.

Among other axes, the report explains that it has been established “An information system aimed at financial institutions obliged to report accounts corresponding to persons not resident in the country (including contracts or schemes qualified as such), in accordance with the requirements, forms and deadlines established by AFIP General Resolution No. 4056-E and its amendments.”

To this end, they must determine “based on each method of presenting information, procedures, registration design definition and validation work to be carried out in each area.”

“Obligated persons must submit the required information and create a file for each calendar year, with the deadline for submission being June 30 of the year following the period submitted.” In this case, they must deliver the balances and movements for the fiscal period 2023 in the form determined by the parent body of the General Directorate of Taxes. More information reaches the United States than that country sends to Argentina (only income data, not balances) and other countries that have signed the agreement under FATCA.

In the letter distributed by an important body in Buenos Aires, it is explained that the following persons must comply with this information request:

• United States Withholding Agents (USWA): A US entity that has control, receipt, custody, assignment or payment of any payment subject to withholding.

• Foreign financial institutions (FFI): A non-U.S. entity that accepts deposits in the ordinary course of similar banking activity; holds financial assets on behalf of others as an essential part of its operations; acting as a holding company or treasury center for a group of foreign financial institutions or being used in connection with certain investment vehicles; It is an investment entity that carries out certain investment activities on behalf of clients, or is an investment vehicle managed by another foreign financial institution, or a collective investment vehicle or similar; Or it is a specific insurance company (or holding company for an insurance company).
• Non-financial foreign entities (NFFE) Any foreign entity that is not a foreign financial institution or any of the following specifically exempted entities: › Listed companies and their subsidiaries (more than 50% of voting and value).
• Entities formed under the acquisition laws of the United States.
• Foreign governments Or organizations wholly owned by them.
• international organizationswholly owned organizations or their subsidiaries.
• Foreign central banks (Unless they act as an intermediary for clients).
• Any other category of people Which the General Secretariat considers to involve low risks of tax evasion.
• United States citizens or residents; A corporation or corporation incorporated in the United States or under the laws of that country or any of its states.

The officials who worked on negotiating and implementing these agreements said information That, year after year, AFIP can make better use of this torrent of information coming from abroad, and they are confident that the same learning process will occur with the valuable data that the United States will provide in 161 days.