A tax resolution—AFIP General Resolution No. 4227 (12 April 2018)—was published in the official gazette to provide rules for withholding and remitting amounts of income tax in relation to financial income from investments earned by foreign beneficiaries. The resolution also includes rules regarding the payment of income tax on capital gains derived from the sale of shares when both the purchaser and seller are foreign beneficiaries (for sales effected after September 2013).
Under the 2017 tax reform, income derived by foreign beneficiaries—provided they do not reside in Argentina—and funds that do not originate from non-cooperative jurisdictions are tax-exempt if:
Income from LEBACS (Argentine Central Bank notes) does not fall within this exemption. Read more about the provisions in the tax reform law: TaxNewsFlash-Americas
Earlier in April 2018, Decreto No. 279/2018 was issued to address the tax treatment of Argentine-source financial income earned by foreign beneficiaries, pursuant to the 2017 tax reform provisions. Read TaxNewsFlash-Americas
General Resolution No. 4227 imposes a requirement to withhold and remit tax on Argentine individuals or legal entities (depending on the type of financial instrument) in making payments to foreign beneficiaries. For these purposes, individuals or legal entities are defined to mean:
The amount of withholding and the applicable presumed income will be determined pursuant to Decree No. 279/2018 (9 April 2018), as referenced above.
Tax withholding will be remitted by means of an “integrated electronic withholding system” (SIRE) according to a schedule of due dates as established in AFIP General Resolution No. 3726/2015 (26 January 2015).
General Resolution No. 4227 also establishes the individuals or legal entities that will act as withholding agents with respect to sales of stock, notes, bonds, corporate bonds, and LEBACs, among other instruments, as well as the method for calculating the withholding amounts, the administrative tax codes, and the regime under which the tax withholding is to be paid. The individuals or legal entities responsible for making the applicable withholding will be based on the following guidelines:
The withholding tax amount will be determined by applying the rates established under the income tax law (as amended by the tax reform law and Decree 279/2018) to 90% of (1) the gross amount paid for the securities, or (2) the amount of actual net income. Foreign beneficiaries that elect to determine the actual net income subject to withholding must report this election to the withholding agent or to their legal representatives, as appropriate, and provide the preliminary sales agreements relating to the transactions or other documents as proof or sufficient evidence of the acquisition and subsequent sale of the securities, as well as evidence that demonstrates the calculation of the computable cost, including any relevant adjustments.
Remittance of the withheld tax will be paid to the Argentine government in the following manner:
In the case of beneficiaries who reside in “non-cooperative” jurisdictions, or when the funds invested are from non-cooperative jurisdictions, the individuals or legal entities will withhold, as a one-time payment, an amount equal to 35% of the “presumed net income” (i.e., the taxpayer cannot choose between the presumed net income and the actual net income), based on the type of income and as provided under the tax reform law provisions and Decree 279/2018.
This withholding tax will be remitted according to the procedures described above.
Taxes on transactions conducted by foreign beneficiaries from September 2013 through the effective date of the tax reform law generally may be paid during the period 11 June through 13 June 2018, according to the following procedures:
Multinational companies that decide to invest in Argentine financial instruments (e.g., securities, bonds, stock, and mutual funds, among others) must comply with General Resolution No. 4227 in light of the changes to Argentina tax law introduced by the tax reform law in late December 2017.
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
Rodolfo Canese | +(5411) 4316-5753 | firstname.lastname@example.org
Violeta Lagos | +(5411) 4316-5740 | email@example.com
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