Professional advisors take on questions that can never be answered anywhere else, and the Argentinian accountants have been taking on a set of questions over the last few years which their training does not prepare them to answer, and which are slow to be addressed in their professional literature. The customers who are sitting across from them are not just people who are speculating that they are going to make money trading and are drawn in by promotional material. They are small business owners, salaried professionals, and retirees who have seen the purchasing power of their peso decline over time with a consistent pattern that eventually prompts them to act no matter how risk-tolerant or not they may be, and have heard enough about currency trading from co-workers, neighbors, and family members to seek a trusted expert to give them insight on the subject.
In those accountant talks, there is a question that goes beyond the technical definition of what is forex trading and into whether it constitutes genuine wealth preservation, if it is within the regulatory guidelines or not, if it involves a tax obligation, if it involves a reporting obligation, and, crucially, if it is worth the dollar exposure it provides as opposed to the physical dollar they have been handing around for generations. These questions call for a response beyond the answer of what a currency pair is and how it works with leverage.
For accountants in Argentina who have taken their clients’ trading issues seriously, it is becoming imperative to become familiar with the retail forex environment, and no longer an optional area of service. The number of clients who have offshore broker accounts, who have made trading gains or losses in foreign currencies and who are unsure of the reporting requirements has become sufficient to the point that the advisors who are unable to deal with these situations are directing business which they may be able to handle to colleagues who have worked through the preparation. Professional learning in this area has shifted from an academic to a practical focus.
Forex trading income is subject to a tax regime that has been revised and has some interpretation issues which AFIP has not addressed in a uniform way that is desired by forex traders and their advisors. Argentine accountants dealing with this landscape are faced with an amalgamation of existing capital gains regimes, foreign source income laws, and new and emerging guidance that falls outside of the realm of the one-size-fits-all approach, and must be carefully understood. If clients ask what is forex trading and if they need to report it, they are asking a question that can only be fully answered through continual monitoring of the regulatory landscape, not through one-off research investments.
Forex discussion by Argentine clients with their accountants has also brought with it questions about how to pick a broker that was not a part of a regular accountant’s advisory practice. A foreign unregulated broker will have its offshore broker disclosures cross-checked against Argentine foreign asset disclosures and it will be interesting to see what the implications of holding offshore funds with a foreign entity, which may not be registered by a sound foreign authority, might be from a legal and tax perspective.
The migration of forex questions into professional, advisory relationships in Argentina is the sign of a more sophisticated market that has moved beyond the purely informal phase. When middle-class people consult their trusted advisors about investing in currency, it has transitioned from a financial fringe activity to a part of how middle-class Argentines think about managing their economic exposure, whether or not their advisors feel prepared to meet it.