05 Ene 24 Bill of Law: Tax Modifications

Agustín Cerolini, Matías Ferrari and Natalia Artmann

On December 27, 2023 the Bill for Bases and Starting Points for the Freedom of Argentines (the “Bill”) was introduced to the Argentine National Congress by the Executive Power (the “PEN” for its acronym in Spanish). Among the issues set out, Chapter V introduces changes to tax regulations, which include the following:

a). Exceptional Regularization of Obligations

The Regularization of Tax, Customs and Social Security Obligations Regime (the «Regime«) is created in order to achieve the voluntary payment of the obligations detailed in the Bill and in order for taxpayers and responsible parties to join the Regime, obtaining different benefits depending on the modality of enrollment and the type of debt they have.

They shall be eligible for tax and customs obligations and social security resources -with the inclusions and exceptions established- due on November 30, 2023, and for infringements committed up to that date, whether or not related to those obligations. The enrolment may be filed as from the date of entry into force of the regulations issued by the Federal Administration of Public Revenues (the «AFIP«) and up to and including 150 calendar days from that date.

The enrolment to the Regime will produce the suspension of the criminal tax, customs and social security actions in progress.

Benefits: a) Cash payment and enrolment within 90 calendar days and forgiveness of 50% of interest accrued up to the enrolment date; b) Payment in instalments and enrolment within 90 calendar days and forgiveness of 30% of interest; c) Payment in instalments and enrolment, after 91 calendar days, forgiveness of 10% of interest. In all cases, 100% of the fines applied will be forgiven.

b). Assets regularization regime

The following persons/entities may enroll: i) individuals, undivided estates, and business entities (article 53 of Income Tax Law) deemed as Argentine tax residents as of December 31, 2023; ii) Those who do not qualify as Argentine tax residents based due to their assets located in Argentina or due to the income they have obtained from Argentine sources; and iii) Non-resident individuals who were Argentine tax residents before December 31, 2023.

The deadline for enrollment will be extended until November 30, 2024. After the enrollment, the taxpayer will have to submit a sworn statement including the documentation and other information to be provided with respect to the assets.

The regime will be divided into three stages with different applicable rates: 5% until March 31, 2024; 10% until June 30, 2024; and 15% until September 30, 2024.

Mandatory advance payment: All taxpayers who enroll must make an advance payment that may not be less than 75% of the Special Regularization Tax. Failure to make the advance payment within the indicated date will cause the automatic cancellation of the enrolment.

The following assets may be declared in Argentina and/or abroad: national or foreign currency, in cash or deposited in bank accounts; ii) real estate; iii) shares and participations in companies, trusts or other similar assets; iv) securities, shares, bonds, among others; v) other movable assets; vi) credits of any nature; vii) rights and other intangible assets. Cryptocurrencies, crypto assets and other similar assets are included as assets abroad.

Benefits: those who enroll will enjoy, among others, the following benefits to the extent of the declared assets: i) Release from any civil action related to tax, exchange, customs and administrative offences that would have corresponded to the breach of the obligations related to the origin of the declared assets, ii) Release from the payment of taxes that they had omitted arising from the declared assets. It includes, among others, Income Tax and undocumented outflows, Transfer of Real Estate, VAT, Personal Property Tax, Solidarity and Extraordinary Contribution to help mitigate the effects of the pandemic.