Argentina’s newly elected government on 17 December 2015 adopted measures that are intended to stabilize and boost the Argentine economy. The new measures affect a policy introduced in 2011 by the former government that imposed strict currency controls, trade protectionism, and heavy taxation.
The new government’s measures provide for the following:
Export (taxes) duties on crops, including corn and wheat, are eliminated. The soybean tariff was reduced by five percentage points. This policy change is expected to encourage farmers to release their crops and thus result in an increase in agricultural shipments.
Argentina will have one official currency rate, determined by the Central Bank in a “managed float” regime. This single exchange rate is expected to eliminate market distortions arising from the multiple rates over the past four years. While fluctuations in the exchange rate may be expected, it is also anticipated that the Central Bank will have the ability to manage effective currency stability.
Restrictions on outbound payments—dividends, royalties, services, imports of goods—are lifted. There are no limitations to acquire foreign currency to settle new liabilities.
In paying off accumulated corporate bonds, Argentine residents will be subject to a program managed by the Central Bank, applicable until June 2016. Beginning June 2016, no limitation will apply to payments of corporate bonds.
Individuals and companies are allowed to purchase up to U.S. $2 million per month to make direct and portfolio investments abroad, as well as to keep such currency in foreign or domestic bank accounts.
Foreign currency proceeds from loans may be kept in a foreign bank account. Nevertheless, the borrower will not be allowed to make payments of interest and principal using the domestic exchange market.
The measures remove the required 30% 365-day bank deposit in an Argentine financial institution for foreign currency inflows applicable to financial loans and portfolio investment and to direct investment that did not comply with certain requirements.
The measures repeal the 35% tax that is imposed on Argentine residents who purchase goods or services from abroad or purchased online using a credit card. The 35% tax is also eliminated on the purchase of foreign travel services made through Argentine travel and tourism agencies.
For more information, contact a tax professional with KPMG’s Latin America Markets Tax practice or with the KPMG member firm in Argentina:
Devon M. Bodoh | +1 (202) 533-5681 | firstname.lastname@example.org
Alfonso A-Pallete | +1 (305) 913 2789 | email@example.com
Juan Martin Jovanovich | (5411) 4316 5810 | firstname.lastname@example.org
Karina Castellano | (5411) 4316 5794 | email@example.com
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