New Significant Pieces Of Legislation In Force: Tax Reforms And Anti-Bureaucracy Reforms In Argentina

Author:Mr Mario Eduardo Castro Sammartino
Profession:Castro Sammartino & Pierini

Delving into the transformation of Argentina's business environment and legal framework, making them more business-friendly and efficient, two new pieces of legislation have just come into force, reforming tax regulations and easing bureaucratic burdens. Following, we will briefly list some of the introduced tax reforms and anti-bureaucracy reforms in Argentina.

  1. Tax reforms

    On 29 December 2017, Law Number 27,430 was published in the National Official Gazette 1, introducing huge tax reforms with the aim of modernizing the tax system, improving the local companies' competitiveness and reduce the federal government fiscal deficit.

    Significant amendments have been introduced to the Income Tax Law, the Value Added Tax Law, and other taxation regulations (e.g.: excise taxes, oil taxes, taxation on individuals, social security contributions, etc.), the procedural tax law, the customs code, and certain accounting regulations.

    Some of the amendments are:

    1. The definition of what constitutes a permanent establishment in Argentina for determining the taxable presence of foreign companies developing activities in the country;

    2. Acknowledgement of inflation for tax purposes, within certain conditions;

    3. A corporate income tax rate cut from the former 35% to 30% for fiscal years 2018 and 2019, and to 25% for fiscal years 2020 and onwards;

    4. The reinstatement of the income tax on dividend/profit distributions, with a tax rate of 7% for fiscal years 2018 and 2019, and 13% for fiscal years 2020 and onwards. Together with the amendment detailed in c), this tax on dividend/profit distributions encourages the reinvestment of profits;

    5. The non-residents capital gain on the disposal of shares will be tax exempted when such shares are publicly traded in stock exchanges under the supervision of the Argentine Securities and Exchange Commission, as long as the foreign beneficiaries do not reside in, or the invested funds do not come from, "non-cooperating" jurisdictions;

    6. Taxation of indirect transfers of Argentine assets - including shares - made by non-residents under certain conditions;

    7. The abrogation of the equalization tax;

    8. Changes in the thin-capitalization rules for the deduction of interest arising from financial loans;

    9. VAT will be levied on digital services provided by foreign companies that are used in Argentina (e.g., downloading of videos, music, games, or similar services).

  2. Red tape reforms

    By the Necessity and Urgency Decree Number...

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