Destinations Central & South America

Argentina Stirs Up Falkland Islands Controversy with New Tourist Tax Exemption

Apr 04, 2014 1:45 pm

Skift Take

Apparently it is easier for Argentina to pick a fight, rather than deal with its own massive economic problems.

— Samantha Shankman

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David Wong  / Flickr

A large welcoming sign at the public jetty at Stanley, the capital of the Falkland Islands. David Wong / Flickr


Almost 32 years to the day since Argentina undertook a failed invasion of the Falkland Islands, the South American nation is exempting tourists to the islands from a tax on credit card spending abroad, claiming the British-controlled archipelago is “national territory.”

The Falkland Islands, South Georgia and the South Sandwich Islands will not be subject to a 35 percent levy on credit card purchases abroad, the Argentine tax agency said today in a resolution published in the Official Gazette.

President Cristina Fernandez de Kirchner in December raised the tax on credit card purchases in foreign currency from 20 percent as central bank reserves fell to a seven-year low. While the 1982 conflict in which 255 British and 649 Argentine military personnel died lasted just 74 days, tensions over the islands, known by Argentines as the Malvinas, heightened in 2012 when Argentina protested the British deployment of a warship in the area.

“Argentina, for a number of years, has had a strategy of putting forward the Falklands problem in all forums at home and abroad,” James Lockhart Smith, head Latin America analyst at Maplecroft Global Risk Analytics, said in a phone interview from London. “This is very much part and parcel of that and is unlikely to have much relevance on the credit card tax itself.”

There are no permanent residents of South Georgia, though there is a government office, museum and two Antartic research stations open in the summer, according to the island’s official website. South Sandwich is a collection of mostly-volcanic, uninhabited islands to the south-east of South Georgia.

International Reserves

International reserves have fallen 33 percent in the past year to $27 billion as the Fernandez’s government uses them to pay foreign debt obligations and import energy, while Argentines have increased spending on foreign vacations and Internet purchases.

In a speech April 2 to mark the anniversary of the invasion, Fernandez announced plans to introduce a new 50-peso note bearing an image of the islands. On her Twitter account, she also said the U.K. is using the islands as a nuclear base.

Falkland islanders in 2012 voted overwhelmingly in a referendum to maintain the South Atlantic archipelago’s status as a British territory.

“The U.K. has no doubt about its sovereignty over the Falkland Islands and surrounding maritime areas, nor about the Falkland Islanders’ right to decide their own future, the right of self-determination as enshrined in the UN Charter and the International Covenant on Civil and Political Rights,” the U.K. Foreign Office said in an e-mailed statement.

To contact the reporter on this story: Charlie Devereux in Buenos Aires at cdevereux3@bloomberg.net To contact the editors responsible for this story: Andre Soliani at asoliani@bloomberg.net Philip Sanders, Bill Faries.

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