The COVID-19 pandemic has prompted several Latin American governments to put forward and, in some cases, enact new wealth tax legislation, says global law firm Trench Rossi Watanabe. Jurisdictions considering the strategy include Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela.
In particular, the firm suggests that in Peru the implementation of a wealth tax is inevitable, although with a general election coming up in April it will be low on the government’s agenda.
Argentina has already implemented a one-off tax, applying to those with assets over ARS200 million on a sliding scale of percentages. The law governing the tax was published in the country’s Official Gazette on February 8, 2021.
Colombia has applied a temporary wealth tax under various titles for many years and it is currently triggered by wealth of COP5 billion or more for the 2020/21 tax year, with the 1 percent rate paid by resident individuals and foreign entities or individuals with assets in Colombia. Law firm Trench Rossi Watanabe expects that discussions of tax reform, under which this temporary wealth tax will continue to be considered, will take place in the first half of 2021.
High-net-worth individuals in Venezuela are also already subject to a tax of between 0.25 percent and 1.5 percent on the global assets of individuals and legal entities that are designated “special taxpayers” by the Venezuelan Revenue Service.
According to Trench Rossi Watanabe, both Brazilian and Mexican governments are now considering various proposed Bills. However, in Brazil debate remains focused on the wide variation on the proposed brackets subject to taxation, from BRL2 million to BRL55 million. The Brazilian tax authority has also recommended a further study into “the possibility of achieving the same economic goals with the tools already available.”
Meanwhile, in Mexico a possible wealth tax has been under debate since 2018 with limited progress. “It is very likely, however, that a new attempt to introduce such taxes will be made toward the second half of this administration (i.e., 2022 to 2024), considering the international pressure on this specific matter,” says Trench Rossi Watanabe.
While Chilean congressmen have been proposing a wealth tax since 2020 to mitigate the impact of the pandemic, initiatives have been deemed unconstitutional as only the president is allowed to submit tax law proposals to congress.
Published on March 22, 2021