Argentina Government withdraws financial reform bill over CEDEAR tax controversy

The Argentine government has withdrawn its Financial Competitiveness Law from the Chamber of Deputies following intense backlash from investors. The controversy centered on a provision within the 240-article omnibus bill that proposed a 15% income tax on capital gains from the sale of CEDEARs, which are certificates used to invest in foreign companies from the local market.

The proposed measure sought to eliminate current tax exemptions for these instruments, aiming to align their tax treatment with direct foreign asset acquisitions. However, the move sparked significant criticism from the financial sector and supporters of the administration, who viewed the tax as a contradiction to the government's commitment to reducing taxes.

Government advisors characterized the disputed article as an outdated draft. While the specific tax provision is being retracted, the broader reform bill, which includes provisions for blockchain-based securities and other financial market modernizations, is expected to undergo further review before being reintroduced to Congress.