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January 11, 2024
2024-0178

Argentine Executive Branch sends bill to Congress that includes new tax measures

  • The bill includes: an Exceptional Regularization Regime for Tax, Customs and Social Security Obligations; an Asset Regularization Regime; and a Special Regime for Tax on Personal Assets.
  • Changes in Export Duties are also included.
  • The bill also provides non-fiscal changes and measures.
 

The Argentine Executive Branch sent the Congress a bill entitled "Law of Bases and Starting Points for the Freedom of Argentines" (Ley de Bases y Puntos de Partida para la Libertad de los Argentinos, in Spanish) which includes tax developments, among other changes.

Exceptional regularization regime for tax, customs and social security obligations

Under the bill, those with tax, customs and social security obligations may apply to the Regularization Regime with regard to their obligations and infractions due as of 30 November 2023. The application may be filed as of the date that the regulations issued by the Argentine Tax Authorities (AFIP) enter into force and up to 150 calendar days from that date, inclusive.

Applying to the regime will result in the suspension of criminal tax, customs and social security actions in progress and will freeze the criminal statute of limitations.

The following benefits are established for the taxpayers that are included in this regime:

  1. Payment in cash and adherence to this regime within the first 90 days after the date the respective AFIP regulations enter into force can result in forgiveness of 50% of the compensatory and punitive interest accrued as of the date of adherence to the regime.
  2. Regularization in a payment-facilities plan and adherence to the regime within the first 90 calendar days after the effective date of the respective regulations can result in forgiveness of 30% of the compensatory and punitive interests accrued as of the date of adherence to the regime.
  3. Regularization in a payment-facilities plan and adhesion to the regime 91 days or more from the regulations' entry-into-force date can result in forgiveness of 10% of the compensatory and punitive interest accrued as from the date of adhesion to the regime.

In all the cases, 100% of the fines applied shall be forgiven.

Assets Regularization Regime

Whether or not they were considered Argentine tax residents as of 31 December 2023 or are registered as taxpayers before the AFIP, individuals, undivided estates and corporations may adhere to the Asset Regularization Regime. Likewise, all individuals who do not qualify as Argentine tax residents, but have assets located in Argentina or income they have obtained from Argentine sources, may also adhere to the Regime.

The term to adhere to the Regime will be extended until 30 November 2024.

Adherence with this Asset Regularization Regime requires the taxpayer to adhere to the regime in the manner indicated in the regulations. Subsequently, the taxpayer must file a return. The regulations will establish the formal requirements of the return, which will include the documentation and other information to be provided.

The regime will be divided into three stages. The date of the taxpayer's declaration of adhesion will define the stage of the regime applicable to the taxpayer and/or to the assets regularized in that stage.

The following assets may be subject to this regularization regime:

  1. Assets in Argentina: local or foreign currency, whether in cash or deposited in bank accounts; real estate located in Argentina; shares, participation in companies, or other similar types of assets; securities; other movable properties; credits of any kind or nature, when the debtor of such credits is an Argentine tax resident; rights and other intangible assets, owned by a tax resident in Argentina; other assets located in the country susceptible of economic value
  2. Assets abroad: foreign currency, whether in cash or deposited in bank accounts abroad; real estate located outside Argentina; shares, participation in companies, or other similar types of assets; securities; other movable assets located outside Argentina; credits of any type or nature, when the debtor of such credits is not an Argentine tax resident; rights and other intangible assets; cryptocurrencies, and other similar assets; and other assets located outside Argentina

The taxable base to determine the "Special Regularization Tax" will be calculated in United States (US) dollars and the tax to be paid will be calculated on the total value of the assets, both in Argentina and abroad on the excess of US$100,000.

Depending on the date of adherence to the regime (there are three stages), the tax rate should be 5%,10% or 15% of the value of the assets, on amounts exceeding US$100,000.

Special Regime for the Tax on Personal Assets

The Regimen Especial de Ingreso del Impuesto sobre los Bienes Personales (REIBP) is created for all tax periods until 31 December 2027.

Individuals and undivided estates that are tax residents in Argentina, substitute taxpayers, and individuals who, as of 31 December 2023, are not considered residents, but had been tax residents in Argentina before that date, are covered by the Regime.

Local corporations can also adhere to the Special Regime as substitute taxpayers, for the tax corresponding to their foreign shareholders on their holding ownership interest in the local entity.

The option to adhere to the REIBP is individual and voluntary; taxpayers may choose to adhere until 31 March 2024, inclusive.

Taxpayers who choose to adhere to the REIBP will pay the Tax on Personal Assets corresponding to the fiscal periods 2023, 2024, 2025, 2026 and 2027 in one single payment.

To determine the taxable amount, the total amount of the assets as of 31 December 2023 (or net equity value of the Argentine company as of that date, if ownership interests in those entities are held by foreign shareholders) must be considered and the resulting value, expressed in US dollars, must be converted into Argentine Pesos using the official exchange rate as of 31 December 2023. The resulting amount will be multiplied by five.

Individuals and undivided estates that adhere to the REIBP will apply the 0.75% tax rate on the taxable base and substitute taxpayers will apply the 0.5% tax rate.

To determine the payment to be made under the REIBP, a compensatory interest must be added equivalent to 125% of the interest rate applied by the Banco de la Nación Argentina for 30-day fixed terms for the period between 1 January 2024 and the day before the effective payment.

The regulations will establish the method and other requirements for filing the REIBP return and calculating the tax payable. The total tax liability must be paid by 31 May 2024, inclusive.

New rates for Tax on Personal Assets:

The tax rates applicable will range from 0.50% to 1.50% in 2023; from 0.50% to 1.30% in 2024; from 0.50% to 1.10% in 2025; from 0.50% to 1.00% in 2026; and 0.50% in 2027.

Export Duties:

  • 15% for all goods included in the tariff positions of the Common Nomenclature of MERCOSUR (N.C.M.) that are not currently subject to export duties (with some exceptions)
  • 15% for all goods included in the N.C.M. that at present are taxed at a rate lower than15% (with some exceptions)
  • 33% for all soybean products currently taxed at a rate of 31%
  • No change for goods included in the N.C.M. that currently are charged export duties at a rate higher than 15%
  • No change to export duties currently in force for hydrocarbons and mining
  • 8% for all goods used in making wine and lemon essential oil
  • 0% for all goods corresponding to the following exports: olives, rice, bovine hides, dairy, fruit, vegetables, beans, lentils, peas, potatoes, garlic, chickpeas, honey, sugar, yerba mate, tea, equines and wool

Other tax modifications in the bill include changes in excise taxes and abrogation of the real estate transfer tax for individuals. Non-fiscal changes include changes in the Commercial Societies Law, Insurance Entities Law, and Civil and Commercial Code — including the creation of a new incentive Regime for Large Investments.1

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ENDNOTE

1 Please, refer to EY Global Tax Alert, Argentine Executive Branch sent bill to Congress that includes new incentive Regime for Large Investments, dated 5 January 2024.

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Contact Information

For additional information concerning this Alert, please contact:

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

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
 
 

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