Repeal Of 10% Withholding Tax On Dividends, Tax Amnesty

Author:KPMG &nbsp
Profession:KPMG
 
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Tax legislation in Argentina includes measures that would:

Repeal the 10% withholding tax on dividend distributions Reduce the "wealth tax" imposed on foreign shareholders of Argentine companies "Regularize" tax, social security, and customs liabilities and allow an installment plan for tax payments Offer a "tax amnesty" program, providing relief from penalties and accrued interest for undeclared amounts or assets under a tax transparency initiative These tax legislative measures would affect existing cross-border transactions and structures as well as ongoing tax planning by multinational entities with operations or investments in Argentina. The measures are intended to encourage economic growth, provide funds for the state pension system, and satisfy judgments against the government for unpaid pensions.

Withholding tax, minimum presumed income tax

Under the legislation, the additional 10% withholding tax applicable to dividends distributed by domestic entities, and received by individuals or "undivided estates" domiciled in Argentina or received by foreign shareholders would be repealed. The equalization tax rule (35% on untaxed profits) would continue and remain in effect.

The minimum presumed income tax—1% on assets held at the end of the tax period, complementary to income tax—would no longer be effective, as from 1January 2019.

"Wealth tax"

Under the legislation, the following minimum—non-taxable—amounts would apply for the following fiscal (tax) periods:

Fiscal (tax) period

AR$

2016

AR$ 800,000 (approximately U.S. $55,000)

2017

AR$ 950,000

2018

AR$ 1,050,000

The tax payable by individuals and undivided estates domiciled in Argentina or abroad would be calculated by applying the following rates:

Fiscal (tax) period

Rate

2016

0.75% over the amount in excess of the minimum non-taxable amount

2017

0.50% over the amount in excess of the minimum non-taxable amount

2018

0.25% over the amount in excess of the minimum non-taxable amount

The tax rate for the purposes of the "wealth tax-substitute taxpayer" (which applies to foreign shareholders of Argentine companies) would be reduced to 0.25%from 0.50%. The wealth tax would no longer apply starting 1 January 2019.

Regularization of tax, social security and customs liabilities, the installment plan

Taxpayers that would be allowed to use the installment payment plan to regularize their tax, social security, and customs liabilities would include legal entities andindividuals responsible...

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