Argentina: New Regulations Under The Argentine Income Tax Law

Last Updated: 13 August 2001
Article by Leandro Martin Pasarella

Co-written by Mr. Guillermo O. Teijeiro

I. Introduction

The income tax reform (the "2000 Tax Reform") introduced by the De la Rúa administration after its inauguration in December 1999 have since then required the issuance of new regulations in order to assist Argentine taxpayers and nonresidents investing in Argentina in the correct interpretation of the new rules. The most relevant area of the 2000 Tax Reform that needed regulations related to the taxation of income from cross-border investments and transactions. Decree No. 1037/2000 issued on November 14, 2000 (the "New Regulations") has come to fill in this blank.

The piece of legislation under analysis can be divided in three main parts. The first part contains new rules on the Argentine transfer pricing regime applicable to related- and unrelated-party transactions entered into by Argentine taxpayers with nonresidents since the beginning of their taxable year 2000. The second part amends the regulations on the taxation of worldwide income derived by Argentine taxpayers, with an especial emphasis on the income derived from passive investments. Finally, the third part of the New Regulations provides rules on the tax credit that is available to Argentine taxpayers for foreign income taxes paid or withheld at source.

II. Transfer Pricing Regime

A. Background

Since the enactment of the 2000 Tax Reform, the Argentine income tax law ("AITL") provides with a transfer pricing regime applicable to transactions entered into between both related and unrelated parties.1 Different methods apply to determine whether the arm's length standard is met in both types of transactions. Methods applicable to related-party transactions are patterned after those recommended by the OECD, while a specific method based on prevalent wholesale prices applies to unrelated-party transactions. The New Regulations which are discussed below precise the scope of the transfer pricing rules introduced by the 2000 Tax Reform.

B. Related-Party Transactions

1. General

AITL Article 14 provides that transactions entered into by Argentine corporations, trusts or permanent establishments2 with related persons located outside Argentina are treated as entered at arm's length to the extent that they are comparable to transactions entered into between unrelated parties under normal market conditions. In the event that a related-party transaction does not meet the arm's length standard, an adjustment to such transaction's price, or to the income, loss or expenses allocated to the Argentine party, should be made according to the most appropriate of the transfer pricing methods provided for in AITL Article 15.

2. Transfer Pricing Methods

The text of AITL Article 15 after the 2000 Tax Reform only enumerates the transfer pricing methods applicable to related-party transactions, without providing any further guidelines or details on the way that they must be applied. The New Regulations define each of the methods involved (i.e., the comparable uncontrolled price method, the resale price method, the cost-plus method, the profit-split method and the profit margin method), following in general terms the OECD Guidelines on Transfer Pricing to Multinational Enterprises and Tax Administrations.

The key factor to the five methods is the reference to "comparable transactions between unrelated parties." The New Regulations provide a concise although broad definition of "related party," and an extensive and detailed definition of "comparability" for transfer pricing purposes.

a. "Related Party"

The New Regulations provide that two or more persons are unrelated for Argentine transfer pricing purposes if they cannot be treated as related pursuant to the article incorporated after AITL Article 15. An Argentine corporation, trust or permanent establishment is related to a foreign person or persons if:

  • Such foreign person or persons manage or control (or are managed or controlled by) the Argentine corporation, trust or permanent establishment, directly or indirectly; or
  • Such foreign person or persons have the decision-making power to orient or define the activity or activities of the Argentine corporation, trust or permanent establishment, or vice versa, as a result of the level of equity participation, intercompany debt financing, or functional or similar influence.

b. "Comparability"

A transaction entered into by an Argentine taxpayer and a foreign related party is comparable to one between unrelated parties if there are no differences regarding the price of the transaction or the contemplated profit margin. In the event that these circumstances are not fully met, a related-party transaction is still comparable to one entered into between unrelated parties if it is possible to make certain adjustments to the latter's price or profit margin so as to reach a substantial degree of comparability.

In order to determine whether related-party transactions are comparable with unrelated-party ones, it is necessary to take into account several factors of comparability. Those factors are, among others, the characteristics of the transactions that are compared,3 the functional analysis of the parties in the comparable transactions,4 the terms of the agreements that instrument the transactions under comparison,5 and their economic circumstances.6 Once it is determined that an unrelated-party transaction may be compared with a related-party one, it may be necessary to make some adjustments to take into account the differences in certain elements of the transactions so as to reach the required substantial degree of comparability. Those elements are, among others:

  1. the payment terms;
  2. the negotiated amounts;
  3. the advertising embedded in the price of the transactions under analysis;
  4. the intermediation costs;
  5. the cost of packaging, insurance and freight;
  6. the quality of the inputs utilized to manufacture the product or to perform the service;
  7. the dates of execution of the transactions under analysis;
  8. the currency utilized;7 and
  9. in the case of commodities, the market price fluctuations.

Notwithstanding the above, the applicability of the comparable uncontrolled price method is limited to few cases by the New Regulations. This is because an Argentine taxpayer will only be entitled to demonstrate the arm's length character of its related-party dealings when the transactions to be compared meet the following requirements simultaneously:

  • the transactions are entered into in comparable markets;
  • the transacted products are similar;
  • the agreed amounts are similar;
  • the intangibles utilized in the manufacturing process are identical or similar; and
  • the financing and monetary conditions can be adjusted.

Additionally, the New Regulations provide that the Argentine tax authorities would not make any transfer pricing adjustments with respect to a related-party transaction to the extent that the price of such transaction is within a normal range of comparable unrelated-party prices or profit margins. For these purposes, the price or profit margin of a related-party transaction is within the aforementioned normal range when it differs from the average price or profit margin for the transaction under analysis in no more than 5 percent.

3. Patent And Trademark Licenses

There is one exception to the presumption that related-party transactions are entered into at arm's length if they are comparable to transactions entered into between unrelated parties. This refers to the case of licenses of patents and trademarks granted by nonresidents to related Argentine corporations, trusts or permanent establishments. Since its enactment, and based on those licenses' specific tax treatment under AITL, this rule raised doubts on the licensee's need to prove the arm's length character of the license.

Pursuant to AITL Articles 91, 92 and 93(a)(2), royalties paid by Argentine persons to nonresidents for the license of patents or trademarks are subject to a withholding tax levied at an effective rate of 28 percent. On the other hand, Argentine corporate licensees (which are subject to a 35 percent corporate income tax rate) are allowed to deduct only 80 percent of the agreed upon royalties. Thus, the net value of the deduction at the corporate licensee's level equals the effective withholding tax on the foreign licensor (i.e., 28%). Under this scenario, and prior to the issuance of the New Regulations, it was assumed that there was no need to demonstrate the arm's length character of these transactions since no harm was possibly inflicted to the Argentine Treasury.

The New Regulations provide otherwise since, prior to taking the appropriate deduction, Argentine taxpayers paying royalties to a foreign related person under patent or trademark licenses will still have to demonstrate that such transactions are entered into at arm's length according to one of the methods provided by AITL Article 15. Consequently, in the event that an adjustment has to be made to the amount of royalties remitted abroad, the Argentine taxpayer will be required to pay the income tax that would be assessed on the amount of the disallowed portion of the deduction claimed for the royalties paid to the foreign related person. This regulation's bottom line is the increase of the overall Argentine income tax burden on related-party patent and trademark licenses that do not comply with the arm's length standard.

4. Reporting Requirements

As provided in the sixth paragraph of AITL Article 15, Argentine corporations, trusts and permanent establishments are required to file a special tax return every six months so as to report relevant data concerning transactions entered into with foreign related parties. Pursuant to the New Regulations, those taxpayers are required to file a return with the Argentine tax authorities reporting the price of related-party transactions entered into in the first half of each taxable year and the volumes involved therein. Additionally, the Argentine tax authorities will be able to require the filing of a complementary annual special tax return. Such return will include details of all the relevant data that will enable the Argentine tax authorities to analyze the impact of the related-party transactions entered into during such taxable year in the assessment of the taxpayers' income tax liability. The New Regulations are silent with respect to the need to file a return with respect to related-party transactions entered into in the second half of the taxpayers' taxable year. However, it should be interpreted that such need would be covered by the annual special tax return to be required by the Argentine tax authorities.

C. Unrelated-Party Transactions

1. Transactions With Tax Havens

Pursuant to the second paragraph of AITL Article 15, as amended by the 2000 Tax Reform, the transactions that Argentine corporations, trusts or permanent establishments enter into with entities incorporated or located in low- or no-tax jurisdictions (i.e., tax havens) do not comply with the arm's length standard. Consequently, Argentine taxpayers are required to demonstrate the arm's length character of their transactions since then. For this rule to be effective, a list of tax haven jurisdictions had to be issued. Besides, since the enactment of the 2000 Tax Reform, it has been discussed whether the requirement of demonstrating the arm's length character of transactions entered into with tax haven companies applies to related-party transactions only or it is extended to unrelated-party transactions as well. Two possible interpretations might have been drawn from the text of AITL Article 15 in the past. Under a first interpretation, this rule would only imply that transactions entered into by an Argentine corporation, trust or permanent establishment with a related party located in a tax haven are not at arm's length and, therefore, the Argentine taxpayer must prove the arm's length character of such transactions. According to a second possible interpretation, both related- and unrelated-party transactions would be deemed as not complying with the arm's length standard when one of the parties is located in a tax haven. The New Regulations give an answer to both issues since they provide for a list of tax haven jurisdictions and solve the interpretation problem that have arisen before their issuance.

The New Regulations incorporate an article which identifies eighty-eight tax haven jurisdictions; the list is even more extensive than that provided by the OECD. One of the most relevant aspects of this list is the inclusion of Uruguay as a tax haven when the foreign counterparty to the transaction is a Uruguayan corporation only authorized to engage in off-shore investment activities. Another relevant aspect relates to the comprehensive definition of "tax haven" for Argentine income tax purposes, which includes not only countries, but also colonies (e.g., Gibraltar), jurisdictions (e.g., Trieste), territories (e.g., Netherlands Antilles) and associated states (e.g., Puerto Rico). In any event, a jurisdiction included in the list may be excluded in the future if it signs an information exchange treaty with Argentina or it amends its local tax legislation in order to eliminate its characterization as a tax haven. As it will be discussed below, this list of tax havens is also applicable in conjunction with other AITL rules concerning the taxation of Argentine taxpayers' worldwide income.

In connection with the interpretation issue, the New Regulations adopt the second possible interpretation of AITL Article 15, outlined above. As a result, both related- and unrelated-party transactions entered into by an Argentine corporation, trust or permanent establishment with a person located in a tax haven will be treated as not entered into at arm's length. In the particular case of unrelated-party transactions, however, it could be argued that Argentine taxpayers can prove the arm's length character of the transactions by demonstrating that the agreed upon price is comparable to the Argentine or foreign wholesale price of the product transacted, as provided in AITL Article 8. However, the New Regulations implicitly amend this AITL rule by stating that Argentine taxpayers will be required to prove that their transactions with unrelated parties located in tax havens are at arm's length based on the most appropriate of the transfer pricing methods of AITL Article 15. As such, the text incorporated by the New Regulations may be contrary to what the rule of law provides. Consequently, a constitutionality issue may arise regarding this matter in the future.

III. Taxation Of Worldwide Income

A. General

The 2000 Tax Reform incorporated anti-deferral rules to AITL. Pursuant to these rules, Argentine taxpayers that are shareholders in corporations located in tax havens, which derive income from passive investments, are required to include the tax haven corporations' income on a current basis rather than when dividends are distributed. In this line of reasoning, the New Regulations provide more detailed rules that deal with the deferral issue, as discussed below. However, both AITL and the New Regulations remain silent on the issue of the percentage of ownership required for the anti-deferral rules to apply. Consequently, even those Argentine shareholders that have a small equity participation in a tax haven corporation (and, as a result, have no control on such corporation) will be required to comply with these rules, notwithstanding the heavy administrative burden that is imposed on them.

B. Definition Of "Passive Income Activities"

AITL Article 133(a) provides that the regulations to be issued thereunder will define the activities that derive passive income (i.e., the "passive income activities"). The New Regulations provide that the concept of "passive income activity" comprises (i) rents and leases of real property (unless they constitute the lessor's trade or business, which is complemented with the management of the real property leased), (ii) loans and investments in bonds, (iii) holdings and dispositions of equity interests in corporations, partnerships and other similar entities, (iv) deposits in financial institutions, (v) licenses of intangibles or other transactions that generate royalties, and (vi) derivative financial instruments entered into for speculative purposes.

C. Tax Haven Corporation Engaged In An Active Trade Or Business

AITL Article 133(a) also provides that Argentine taxpayers that are shareholders in corporations incorporated in tax havens must include on a current basis the passive income that those corporations may derive. The New Regulations complement this rule by providing that said taxpayers are required to include the income derived by the corporations located in tax havens from an active trade or business only when they actually distribute dividends. The same rules apply to Argentine shareholders in tax haven corporations whose passive income represents less than 50 percent of their total gross income. Consequently, the scope of AITL Article 133(a) is restricted in these cases.

D. Look-Thru Rules

AITL provides that the anti-deferral rules apply to Argentine shareholders in tax haven corporations so as to subject the passive income that those corporations derive to the Argentine income tax on the hands of the Argentine shareholders on a current basis. However, AITL does not require these Argentine shareholders to include on an accrual basis the passive income of tax haven corporations wholly or partially owned by tax haven corporations in which the Argentine shareholders have an equity interest. Consequently, based on the text of the law, it could be argued that Argentine shareholders are not required to make such inclusion. As a result, until the issuance of the New Regulations, the AITL rule could be legally circumvented by interposing a tax haven corporation (the "first-tier tax haven corporation") on top of another one deriving the passive income (the "second-tier tax haven corporation") that would otherwise be subject to the Argentine income tax currently. The New Regulations, however, expressly provide that Argentine shareholders in first-tier tax haven corporations will have to include on a current basis the passive income derived not only by such corporations but also by second-tier tax haven corporations.

This new rule raises several issues. The first one relates to its constitutionality. Since AITL is silent on this aspect, it will be necessary to interpret whether the extension of the applicability of AITL Article 133(a) goes beyond the intended scope of the AITL rule. In the event that the New Regulations are considered constitutional, a second issue arises in those cases in which the first-tier tax haven corporation reaches the active trade or business threshold referred to in Section III.C above and the second-tier tax haven corporation does not. In these cases, the New Regulations are not clear on whether the active trade or business exception would still apply irrespective of the income derived by the second-tier tax haven corporation; or, on the contrary, the Argentine shareholders would be required to add up all the items of income derived by the first- and second-tier tax haven corporations so as to determine the applicability of such exception. Finally, the third issue is originated in the fact that this rule would not prevent the Argentine shareholders from setting up a third tax haven corporation, which would transform the second-tier tax haven corporation that derives the passive income into a third-tier one out of the scope of application of the rules incorporated by the New Regulations.

E. Losses From Disposition Of Equity Interests By Tax Haven Corporations

AITL provides that losses realized from dispositions of stock or other equity interests in companies or other legal entities by tax haven corporations in which Argentine taxpayers are shareholders are characterized as foreign source losses for Argentine income tax purposes. In addition, such losses can only be offset against gains realized from the same type of transactions, which are characterized as foreign source income by AITL. The New Regulations reinforce this rule since they provide that such losses will only be offset at the tax haven companies' level rather than at the Argentine shareholders' level, and only against gains realized by those companies from similar transactions. Consideration should be given to the fact that those losses can be utilized to offset taxable gains realized within the following five taxable years after the losses are incurred. Therefore, the restrictions imposed by AITL and the New Regulations may be very stringent on Argentine taxpayers, who may be forced to cause the disposition of their tax haven companies' stockholdings just to utilize the accumulated losses before they expire.

F. Dividend Distributions

AITL Article 133(a) provides that the regulations will determine the way that Argentine taxpayers will compute the dividends distributed by tax haven corporations for purposes of assessing their Argentine income tax liabilities. The New Regulations, in turn, state that dividends will not be taxable to the extent that they comprise passive income that has been subject to the Argentine income tax in previous taxable years. In addition, the New Regulations provide that those dividends will constitute taxable income for Argentine income tax purposes when they are distributed out of retained earnings accumulated as of December 31, 1999. The same rule also applies to dividends distributed out of earnings accumulated since such date until the date of distribution if they comprise income from an active trade or business.

The New Regulations provide for ordering rules so as to determine whether the dividends distributed are taxable for Argentine income tax purposes. Thus, dividends from a tax haven corporation will be considered distributed out of (i) retained earnings accumulated as of December 31, 1999, (ii) retained earnings accumulated after that date that comprise active business income, and (iii) retained earnings accumulated thereafter that comprise passive income. In this regard, it is worth mentioning that the Argentine tax authorities may issue a revenue procedure in the future so as to determine how Argentine shareholders in tax haven corporations will demonstrate the amount of retained earnings that can be distributed. This may imply that the Argentine tax authorities may require the access to some type of information available in the tax haven corporations' financial statements to consent that the dividends from those corporations are correctly computed for purposes of assessing the Argentine shareholders' income tax liabilities.

G. Treatment Of Foreign Partnerships

Pursuant to AITL Articles 133(d) and 149, Argentine partners in foreign partnerships are required to include in taxable income on a current basis their pro-rata share of the foreign partnerships' income. The New Regulations provide that in the case of foreign partnerships required to assess their foreign income tax liabilities based on a notional amount of taxable income, the Argentine partners will have to include in taxable income their pro-rata share of such notional amount. Neither the AITL nor the New Regulations provide for a mechanism to adjust any differences that may result thereafter.

H. Dividend Exclusion

Pursuant to AITL, shareholders of Argentine corporations are exempt from Argentine income tax on their received dividends, regardless of their residence and to the extent that such dividends are distributed out of income that has been previously taxed at the distributing entity's level.8 Otherwise, a 35 percent tax is levied on the portion of the dividends that are paid out of earnings that have not previously been subject to Argentine income tax. On the other hand, Argentine taxpayers are always subject to Argentine income tax on the dividends that they receive from foreign corporations.9

Based on these rules, Argentine shareholders in foreign corporations, which in turn are shareholders in Argentine companies, have been taxed on the dividends distributed by those foreign corporations, notwithstanding the possibility that those dividends had been distributed out of earnings consisting of the exempt dividends or other profits distributed by Argentine companies. The New Regulations eliminate this inefficiency by permitting the Argentine shareholders to subtract from the amount of dividends received from the foreign corporations their pro-rata share of dividends and other profits distributed by Argentine companies. Thus, they are subject to Argentine income tax only on the amount of dividends distributed by the foreign corporation out of non-Argentine earnings.10 Consideration should be given to the fact that this preferential treatment is not available to dividends distributed by tax haven corporations.

I. Dividends From Foreign Corporations

The New Regulations provide that dividends that Argentine residents receive from foreign corporations must be grossed up to take into account the foreign taxes paid by first- and second-tier distributing corporations.11 Thus, in order to arrive at the amount of taxable dividends, Argentine shareholders in foreign corporations will have to add to the amount of dividends received from foreign first-tier corporations:

  1. the foreign income taxes, if any, levied in the second-tier foreign corporations' countries of incorporation on the pro-rata share of the earnings of such second-tier foreign corporations that are attributable to first-tier corporations;
  2. the foreign withholding taxes, if any, levied upon dividend distributions to first-tier foreign corporations in the second-tier foreign corporations' countries of incorporation;
  3. the foreign income taxes, if any, levied in the first-tier foreign corporations' countries of incorporation on the pro-rata share of the earnings of such first-tier foreign corporations that are attributable to the Argentine shareholders; and
  4. the foreign withholding taxes, if any, levied upon the dividend distributions to the Argentine shareholders in the first-tier foreign corporations' countries of incorporation.

J. Attribution Of Income To Branches Of Nonresidents

After the enactment of the 2000 Tax Reform, branches of nonresidents are deemed residents of Argentina for purposes of assessing their income tax liabilities. Consequently, they are subject to Argentine income tax on their worldwide income. Complementing these rules, the New Regulations provide that Argentine branches of nonresidents must maintain a separate set of books and records with the relevant economic, financial and accounting information necessary to calculate the branches' Argentine income tax liabilities. More significantly, the New Regulations provide a broad force of attraction rule pursuant to which income sourced within or without Argentina that arises from the branches' trade or business must be attributed to the Argentine branches, even if those branches derive such income only indirectly. Consequently, the New Regulations extend the scope of the Argentine income tax so as to reach income that is not directly derived by Argentine branches of nonresidents as long as such income is obtained as a result of engaging in the branches' trade or business.

IV. Foreign Tax Credit

A. General

Argentine taxpayers are entitled to claim the foreign income taxes that they effectively pay abroad as a credit against the Argentine income tax levied on their income from sources without Argentina, up to the amount of the Argentine income tax that would otherwise be levied on such income. After the 2000 Tax Reform, Argentine taxpayers were only able to claim the direct foreign tax credit (i.e., the credit for the taxes effectively paid abroad by the Argentine taxpayers). The indirect foreign tax credit that had been allowed by the reform enacted in December 1998 was eliminated by the 2000 Tax Reform. Nonetheless, as discussed below, the New Regulations incorporate it back to the Argentine income tax system, in order to alleviate Argentine taxpayers from potential situations of double taxation.

B. Foreign Taxes Levied On Presumed Bases

For a foreign income tax to be creditable for Argentine income tax purposes, AITL provides that it must be levied on the taxpayer's net income or on some other basis that takes into account the recovery of costs and expenses incurred in the production of income. The New Regulations, in addition, provide that the foreign tax credit will also be available with respect to foreign income taxes levied on a presumed net income basis. Although it is not entirely clear, it could be argued that a foreign tax credit would also be available for the alternative minimum taxes that are assessed on bases unrelated to net income, such as assets or net assets.

C. Indirect Foreign Tax Credit

As previously mentioned, the New Regulations reintroduce the indirect foreign tax credit (or deemed-paid foreign tax credit) in the Argentine income tax system. However, the indirect foreign tax credit is available with respect to foreign income taxes paid by a foreign corporation and by a second-tier foreign corporation, only if the following requirements are simultaneously met:

  • In the case of direct participation in a foreign corporation, the Argentine taxpayers must demonstrate that:
  • they are resident of Argentina;
  • they own at least 25 percent of the shares of all classes issued by the foreign corporation;
  • the foreign income taxes have been effectively paid. For these purposes, the Argentine taxpayers must provide the appropriate documentation supporting the claim of their pro-rata share of the credit, which must be (i) calculated on the basis of the percentage of equity participation in the foreign corporation, and (ii) due as a result of a dividend distribution;
  • the foreign income taxes are paid by the deadline to file the Argentine income tax return for the taxable year in which the dividends are received. If the foreign income taxes are paid after that date, the foreign tax credit will be available in the taxable year in which such taxes are paid (usually the year following the year of distribution).
  • In the case of indirect participation, and in addition to the previously mentioned requirements, the Argentine taxpayers must demonstrate that their participation in the first-tier foreign corporation is equivalent to at least 15 percent of the capital of the second-tier foreign corporation during the taxable year prior to the dividend distribution and until such distribution occurs. In addition, the first-tier foreign corporation must be incorporated in a jurisdiction that is not included in the list of tax havens.

D. Foreign Tax Credit For Withholding Taxes On Dividend Distributions

The New Regulations provide that the foreign tax credit for withholding taxes levied by a foreign country upon a distribution of dividends is available in the year in which such withholding taxes are effectively paid, even though the income may have already been subject to Argentine income tax. Application of this rule may result in a mismatch between the timing for the income inclusion and the timing for the claim of the foreign tax credit. Considering that foreign tax credits may only be carried forward for a period of five taxable years (with no carry back available), this feature will require special attention from Argentine shareholders in foreign companies at the time of receiving dividend distributions from abroad.

Footnotes

1The Argentine transfer pricing system applies to unrelated-party transactions, even though it is the general understanding that those transactions are entered into at arm's length.

2As regards its scope of application, Argentine law differs from other countries' transfer pricing legislation in the following: Argentine transfer pricing rules also apply to transactions entered into between an Argentine branch and its foreign head office (or another entity related to the foreign head office), and vice versa.

3The New Regulations distinguish four different types of transactions, and provide a list of characteristics for each of them. Those transactions are: (i) financial transactions; (ii) provisions of services; (iii) sales and rents of tangible personal property; and (iv) licenses of intangibles.

4The functional analysis is based on the assets utilized by each of the parties in the transactions under comparison, and the type of risks assumed by those parties.

5The terms of the agreements relevant for the comparison relate to those that may have an impact in the price of the transaction or the profit margin that the parties may generate therefrom.

6The economic circumstances relate to the geographic location of the markets, the seasonality of the transactions, and the levels of supply and demand, among other factors.

7If the currency of the transactions under analysis do not have an exchange rate in Argentine pesos, the price of those transactions must be first expressed in U.S. dollars and then in Argentine pesos, pursuant to the Argentine convertible currency law, which pegs the Argentine peso to the U.S. dollar at an exchange rate of US$1:Arg.$1 since April 1, 1991.

8The same rule applies to profits distributed by other types of Argentine entities that are assimilated to corporations for income tax purposes.

9This tax treatment also applies to profits distributed by other types of foreign entities or earnings remitted by foreign permanent establishments.

10This issue has not arisen in connection with profits distributed by foreign companies that are not corporations. This is because those foreign companies are treated as flow-through entities for Argentine income tax purposes. As a result, the Argentine partners in those companies are deemed to receive the dividends and other profits distributed by Argentine entities and, therefore, can exclude such items from taxable income for purposes of assessing their Argentine income tax liabilities.

11As it is discussed in Section IV below, the New Regulations incorporate the indirect foreign tax credit back to the Argentine tax system, which requires this gross-up mechanism.

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    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions