Argentina Cuts Tax Breaks for Mutual Funds

Despite market opposition, Argentina recently cut tax breaks for mutual funds and financial trusts, satisfying the center-left government promise to raise taxes on financial earnings, Reuters reports.

Mutual funds manage approximately $8.5 billion in Argentina and trusts have expanded quickly in recent years due to limited investment options.

A government decree in the official gazette stated, “To avoid economic and financial distortions that affect the resources needed to finance public outlays…it becomes necessary…to limit the reach of said tax benefit.”

The decree also stated that it would make exceptions for trusts invested in infrastructure projects that expand public utilities.

Economists say such moves reduce liquidity and incentives to strengthen the already weak Argentinean market.