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UPDATE 1-Argentina capital gains tax proposal to have limited impact on yields -central bank
November 15, 2017 / 8:21 PM / a month ago

UPDATE 1-Argentina capital gains tax proposal to have limited impact on yields -central bank

(Adds background on Argentina tax reform, Sturzenegger’s explanation for why the impact on yields would be limited)

BUENOS AIRES, Nov 15 (Reuters) - Argentina’s proposal to implement a capital gains tax on individuals as part of a broad-based tax reform will have a “limited impact” on the yields of public debt instruments, Central Bank Governor Federico Sturzenegger said on Wednesday.

“We do not think this will generate any disruption or very significant change,” Sturzenegger said in a presentation. “This tax exists in other countries all over the world. We think it is good that Argentina is starting to normalize.”

President Mauricio Macri’s government has proposed a reform to the country’s tax code to reduce corporate income taxes for companies that re-invest their earnings, but implements some new taxes to compensate for the fiscal impact.

That included a proposal to tax individuals’ capital gains from government bonds at 5 percent for instruments denominated in pesos and 15 percent on profits from bonds issued in foreign currency or indexed to inflation, prompting concerns that investors would demand higher returns.

Companies already pay capital gains tax. Sturzenegger noted that individuals’ holdings made up a small portion of the total stock of short-term Lebac securities and local government bonds.

“It is a relatively limited amount,” Sturzenegger said. (Reporting by Luc Cohen Editing by Bernadette Baum and Sandra Maler)

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