On December 17th, 2019, the National Executive Branch sent to the National Congress a bill (hereinafter, the "Emergency Bill") contemplating tax and customs changes. It is expected that the bill will be passed prior to year-end. Below is a summary of the main tax changes.
Income tax changes
Personal income taxation
As from 2020, the Emergency Bill proposes non-taxation on:
a)
interest income arising from fixed-term deposits held in Argentine Pesos;
b)
interest income and capital gains obtained from Argentine government bonds, financial trusts, investment funds and corporate bonds (Obligaciones Negociables) issued by Argentine companies.
Corporate taxation
Corporate income tax and dividend withholding tax rate:
the Emergency Bill establishes a CIT rate of 30% and a withholding rate on dividends of 7% for fiscal year 2020 (by freezing the reduction originally set for 2020).
Inflation adjustment for income tax purposes:
the bill contemplates an apportionment
from three to six fiscal periods for the tax accounting of the inflation adjustment in respect of the two subsequent fiscal periods commencing following January 1st, 2019.
Export duties
The Emergency Bill authorizes the Executive Branch to set export duties up to a maximum of 33% of the taxable base or the FOB value, setting the following caps:
- Soybeans: 33% of the taxable base or the FOB value;
- Hydrocarbons and mining: 8% of the taxable base or the FOB value;
- Agro-industry, industrial goods and services: 5% of the taxable base or the FOB value; and
- Other goods: 15% of the taxable base or the FOB value, for goods that were not subject to export duties as of September 2nd, 2018 or that were subject to a 0% export duty.
Statistical fee
The Emergency Bill sets, until December 31st, 2020, an increase from 2.5% to 3% of the statistical fee rate applicable on imports.
Wealth Tax
Wealth tax rates
: The Emergency Bill increases the wealth tax rates to 0.50%, 0.75%, 1% and 1.25% for resident individuals and undivided estates, effective as of fiscal year 2019. Currently, the rates are 0.25%, 0.50% and 0.75%.
Assets located abroad
: The bill delegates in the Executive Branch the power to increase the maximum rate (from 1.25% to 2.5%) if the assets are located abroad, and to reduce it, if the proceeds of the financial assets located abroad are repatriated.
Net equity tax
: As from fiscal year 2019, the bill increases the tax rate from 0.25% to 0.50% applicable to shares or participations in Argentine companies, paid by the companies on behalf of the shareholders.
Substitute obligors
: As from fiscal year 2019, the bill increases the tax rate from 0.25% to 0.50% in respect of resident persons holding the condominium, possession, use, enjoyment, disposal, deposit, holding or custody, administration or guardianship of property that is subject to the tax and belongs to non-resident individuals or undivided estates located abroad.
Creation of a new tax on payments and consumptions in foreign currency (Impuesto para una Argentina Inclusiva y Solidaria) (PAIS)
The Emergency Bill creates a tax of 30% on the total amount of each of the following transactions:
- Purchase of banknotes and foreign currency (including traveler's checks) for treasury or without specific destination linked to the payment of obligations under the terms of the regulations in force in the Exchange Market, made by resident individuals and entities.
- Exchange of foreign currency performed by financial institutions on behalf of and at the request of the acquirer/renter or borrower, for payment of the acquisition of goods or services and rentals of services performed abroad, paid with credit cards, debit cards or any other payment method specified by the regulations.
- Exchange of foreign currency made by financial institutions for the payment, on behalf of a resident party, for services rendered by non-resident individuals, which are cancelled with credit cards, debit cards or any other payment method specified by the regulations.
- Services performed abroad acquired through local travel and tourism agencies (wholesale or retail); and
- Acquisition of international transportation tickets (land, air and water transportation).
The new tax is levied on resident individuals and entities performing any of the transactions described above; where the transactions are performed through credit cards or similar cards, the tax will be levied on the cardholder. The tax will be collected and remitted to tax authorities through withholding agents.
The Emergency Bill does not contemplate the creditability of this new tax against income tax or other taxes.
Changes in the Tax on Argentine bank accounts Credits and Debits
Any cash debit made from Argentine bank accounts held by corporate taxpayers (other than small and medium size companies) will be subject to a 1.2% tax.
