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A. Tax changes approved by Congress

The Argentine Congress passed legislation introducing different tax changes related to export rights and inflation adjustment (among other issues).

1. Law No. 27,467

Law No. 27,467 (the "Budget Law") introduces several tax changes, as follows:

a) Export rights: sets forth export rights on services, applicable on the taxable value.

The Budget Law passed by Congress contains an amendment to the definition of goods contained in article 10 of the Customs Code (the "CC"). According to the proposed change, "the rendering of services in the country, when such services shall be effectively used or exploited abroad" is included on the definition of goods for customs purposes. The article also states that the Executive Branch will issue the necessary regulations to complete this amendment.

Furthermore, the applicable export duties on services will be determined based on the value stated in the invoice or similar document.

Finally, the Budget Law also ratifies the delegation on the Executive Branch of the power to set the export duties rate contained in article 755 of the CC. According to this ratification, such powers may be used until December 31, 2020, subject to the limit of 12% in the case of goods that were not subject to export duties as of September 2, 2018 (which is the case of export of services). This means that unless extended by Congress, export duties will expire by December 31, 2020.

b) Tax Secrecy: it is extended in any cases in which any information is sent abroad as part of cooperation agreements entered into between the Federal Tax Authority (AFIP for its acronym in Spanish) and tax authorities from other countries.

c) Tax Value Unit: the deadline for sending the bill to create a Tax Value Unit is extended until September 15, 2019, to determine fixed amounts, minimum taxes, tax brackets and other values set forth in tax regulations, enforced by AFIP.

d) Books, newspapers, magazines and other publications: The VAT exemption provided for books, brochures and similar printed material, newspapers, magazines and periodical publications is extended to the entire commercialization chain. Also, subscriptions to digital journalism publications are VAT exempted.

e) Soybeans. Tax rate reduced in VAT: As from January 1, 2019 a reduced VAT rate is established for trading soybeans and certain waste produced as a result of the industrialization of such beans.

The Budget Law also introduces provisions related to excise taxes, personal assets tax, VAT reimbursement to end consumers, VAT exemption for social housing and import of materials for railways and ports, as well as rules about fuels.

2. Law No. 27,468

Law No. 27,468 amends the inflationary adjustment provisions and sets forth new reference values so that such adjustment may be applicable.

In that sense, Law No. 27,468 sets forth that the adjustment shall be applicable whenever the variation of the inflation index (which should be of 100% in a term of 3 years) exceeds 55%, 30% and 15% for the 2018, 2019 and 2020 fiscal years, respectively.

Law No. 27,468 abolishes the prohibition of indexation for financial statements, which shall continue to be governed by the provisions of section 62 of the General Corporations Law. This provision shall be applicable as from the date that may be established by the Executive Branch through supervising agencies or the Central Bank of Argentina (BCRA for its acronym in Spanish) in regard of balance sheets or financial statements that may be submitted to it.

The provisions of Law No. 27,468 shall be applicable for the fiscal years which started on January 1, 2018.

B. Double Taxation Treaty between Argentina and China

In the context of the bilateral meetings held during the G-20 Summit, during November of 2018 in Buenos Aires, Argentina and China signed the Joint Action Plan 2019-2023, which establishes a road map by means of cooperation actions in political, economic and commercial matters.

As part of this cooperation program, both countries entered into a Double Taxation Treaty. The Treaty will enter into force once it is approved by the National Congress.

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