December 17, 2019
Argentina reorders income tax law and its regulatory decree and issues list of jurisdictions considered “non-cooperating” for tax purposes
Through Decree No. 824/2019, published in the Argentine Official Gazette on 6 December 2019, the Argentine Government reordered the Income Tax Law (ITL) for ease of reference and interpretation.
In addition, Decree No. 862/2019, published in the Argentine Official Gazette on 9 December 2019, reordered the ITL’s Regulatory Decree and incorporated provisions that were contained in different regulations (e.g., taxation of nonresident investors, tax rules applicable to real estate transactions and severance payments). The decree also lists the countries that should be considered “non-cooperating” for tax purposes. The list is effective 9 December 2019.
Effect of “non-cooperating” jurisdiction provision
The “non-cooperating” jurisdiction provision affects certain provisions of the ITL and the Tax Procedural Law.
Specifically, a 35% income tax withholding rate, instead of the 5% or15% income tax withholding rate, would apply to capital gains from the sale of:
Additionally, transactions conducted with individuals or entities located in “non-cooperating” jurisdictions are not considered performed on an arm’s-length basis and, thus, are subject to transfer-pricing analysis and documentation obligations. Expenses incurred by Argentine entities that are deemed Argentine-source income in favor of foreign parties established in “non-cooperating” jurisdictions should be deducted for tax purposes in the year of accrual only if the payment is made by the date when the income tax return for that year is due. Otherwise, the expense must be deducted in the year of payment.
The “non-cooperating” jurisdiction provisions affect the exemption for foreign beneficiaries applicable to:
The exemption will apply, however, if the foreign beneficiaries do not reside in, and the amounts do not arise from, a “non-cooperating” jurisdiction.
The non-cooperating provisions also affect:
New “non-cooperating” jurisdiction list
The complete list of “non-cooperating” jurisdictions is as follows:
For additional information with respect to this Alert, please contact the following:
Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific