On May 18, 2017, the Argentine Tax Authorities ("AFIP") issued General Instruction No. 2/2017, adopting the ruling of the Argentine Supreme Court of Justice (the "Court") in the cases "Hermitage SA" (2010) and "Diario Perfil SA" (2014). In accordance with this ruling, AFIP exempts taxpayers from paying the tax on minimum presumed income when they can prove the existence of losses in their financial statements and register them in the income tax affidavit of the applicable fiscal year.
The tax on minimum presumed income is calculated by applying a rate of 1% on the value of the assets of Argentine tax residents located in Argentina or abroad. The tax was created on the presumption that the taxpayers' assets yield profits. This presumption is calculated over the value of the taxpayer's assets at the end of the fiscal year.
In the first case abovementioned ("Hermitage S.A."), the Court ruled on the unconstitutionality of Chapter V, Section 6 of Law 25063 which deals with the tax on minimum presumed income. The Court considered that Hermitage S.A. had proved its losses and, therefore, this hotel was not able to pay the tax. It was clear that the statutory presumed income did not exist.
In the case at hand, the Court declared said section unconstitutional since, under this provision, taxpayers were not able to prove that they did not obtain the statutory presumed income. The Court held that taxpayers do not need to show that their assets cannot yield the profits presumed by law...