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November 14, 2022
2022-6103

Argentine Lower House of Congress approves Budget bill for 2023

  • The Budget bill establishes a new disclosure program for unreported foreign currency and expands the voluntary disclosure program for construction investments. It also incorporates the possibility of deferring the positive tax inflationary integral adjustment in three fiscal periods.

On 26 October 2022, the Argentine Chamber of Deputies approved the Budget bill for 2023. The bill includes a new disclosure program for unreported foreign currency and the expansion of the normalization program of local and foreign currency for construction investments.[i] In addition, the bill incorporates the possibility of deferring the positive tax inflationary integral adjustment in three fiscal periods.

The new bill has been sent to the Chamber of Senators for final approval.

New disclosure program for unreported foreign currency

The bill incorporates a new disclosure program for unreported foreign currency intended for the promotion of investments and production. The disclosure program permits individuals and corporations residing in Argentina to voluntarily declare before the federal tax authorities, the holding of foreign currency in Argentina and abroad within 360-calendar days of the date that the disclosure program enters into force.

The bill imposes a special tax on the value of the declared holdings, according to the following rates:

  • 5% for funds deposited within 90-calendar days as of the date that the disclosure program enters into force.
  • 10% for funds deposited from the day after the 90-calendar day period ends to the end of another 90-calendar day period.
  • 20% for funds deposited from the day following the expiration of the 180-calendar-day period above to the end of another 180-calendar day period.

Individuals and corporations may only use the declared funds for the payment of imports of goods and services destined to their productive activity.

Normalization program of local and foreign currency for construction investments

The normalization program of local and foreign currency for construction investments established by Law 27,613 allowed individuals and corporations residing in Argentina to voluntarily declare the holding of foreign and/or local currency in Argentina and abroad, within 120 calendar days of 12 March 2021.

The normalization program stated that the declared funds were to be used to purchase domestic government bonds and invest in the development of real estate projects in Argentina. The new bill admits the application of the declared funds for the acquisition of a second-hand real estate, provided that one of the two conditions is met:

  • The real estate is the residence of the declarant of the funds.
  • For a term of not less than 10 years, the real estate is to be leased exclusively for the residence of the tenant.

Deferral of the positive tax inflationary integral adjustment

The bill also provides the possibility for Argentine corporations to defer the positive tax inflationary integral adjustment for income tax purposes under the following conditions:

  • The deferral is only applicable to the first and second fiscal year beginning on or after 1 January 2022.
  • In the case of choosing this option, one-third of the tax adjustment may be taxed in the fiscal period of the tax inflationary adjustment calculation and the remaining two-thirds, in equal parts, in the following two fiscal periods.
  • The taxpayer must invest in the purchase, construction, manufacture or definitive importation of fixed assets, except automobiles, during each of the two fiscal periods immediately following the fiscal year of computation of the one-third, an amount that is greater than or equal to AR$30 billion (approx. US$188.6 million).

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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

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Endnotes

  1. For more information, see EY Global Tax Alert, Argentina enacts tax incentives and voluntary disclosure program to promote construction and access to housing, dated 23 March 2021.
 
 

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