The Minister of Economy has announced the end of currency controls in Argentina, marking the beginning of the third phase of the country’s economic program. Key measures include the removal of restrictions on foreign currency purchases for individuals.
Moreover, it is also included the authorization for companies to distribute dividends to non-resident shareholders from fiscal years starting in 2025. Additionally, deadlines for foreign trade operations have been eased, aiming to boost economic activity.
Measures and impact on framework
The Central Bank of Argentina has implemented a floating exchange rate regime within a band, allowing the US dollar to fluctuate between ARS 1000 and ARS 1400 in the Free Exchange Market. This range will expand at a monthly rate of 1%. The system is intended to foster free currency competition and ensure a predictable evolution of the exchange rate based on market supply and demand.
Under this framework, if the exchange rate hits the lower limit of the band, the Central Bank will buy dollars to maintain the floor and increase international reserves. Conversely, if the rate reaches the upper limit, the Bank will sell dollars to absorb excess liquidity. These interventions will not be sterilized, allowing the money supply to expand or contract according to market conditions.
Removal of restrictions
The upcoming Central Bank Communication A 8226 will formally eliminate the monthly USD 200 cap on individual access to the foreign exchange market and remove restrictions related to pandemic assistance, public employment, and subsidies. In addition, the existing tax on foreign currency purchases will also be eliminated for general transactions, though it will remain in place for tourism and credit card payments.
These reforms aim to further liberalize the foreign exchange market and encourage foreign investment. Therefore, if you are interested in expanding your multinational or investment fund to the country, do not hesitate to contact us to benefit from our accounting, tax and payroll services in Argentina.
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