On 18 July 2017, Federal Tax Authority (FTA) General Resolution 4094-E (the Resolution) was published on the Official Gazzette.
The Resolution establishes a mechanism for the payment of Income Tax arising from the sale, exchange, barter or disposition of shares, quotas and other equity -including investment funds quotas-, securities, bonds and other values, made by foreign beneficiaries.
The regulation of this issue was pending after Law 26,893 (which subjects the purchase and sale of shares and securities to Income Tax) was enacted; the Resolution introduces different provisions that intend to bring a greater degree of certainty to these operations.
1. Applicable rate
The Resolution establishes that the applicable Income Tax withholding rate will be 15%, calculated (i) over 90% of the amounts paid for the acquisition of the previously mentioned elements, or (ii) over the net income determined in accordance with section 93 of Income Tax Law.
If the taxpayer chooses to pay the tax on the base of its net income, the interested party will have to communicate such decision to the withholding agent, providing copies of the documents that evidence the acquisition and subsequent sale of the shares. The withholding agent will have the obligation of keeping the documents and paper works delivered by the foreign beneficiary at the disposal of the FTA.
2. Argentine residents.
An Argentine resident will have to act as withholding agent if he acts as the purchaser of the securities, unless the operation is made through a market authorized by the Argentine Securities and Exchange Commission.
Payment of the tax will have to be made following the procedure established on General Resolution 739.
3. Foreign residents
When the purchaser of the securities is a foreign resident, Income Tax must be cancelled by the foreign purchaser with an international wire transfer denominated in US dollars to a FTA's bank account, within 5 business days as from the date of the operation. The applicable exchange rate will be the existing one at close of business on the day before the transaction.
The Resolution establishes that individuals in charge of registering the operation with the corresponding government entities must request from the purchaser the exhibition of the ticket (and a certified copy of it) that evidences the payment of the applicable Income Tax withholding, reporting to the FTA all relevant data regarding the operation, the name of the corporation and the foreign purchasers and sellers.
5. Retroactive application of the Resolution
The Resolution establishes that its provisions are applicable to operations cancelled as from 23 September 2013, inclusive.
To that end, the Resolution establishes an extension of the term until 29 September 2017 to pay the taxes arising from the operations carried out until 17 July 2017, indicating that all payments made before such date will be considered as made on time.