Argentina: City Of Buenos Aires Adheres To The Tax Amnesty Regime Launched By The Argentine Government And Promotes A Tax Moratorium

1. Tax Amnesty Regime adherence

On September 8, Law No. 5,616 was published in the Official Gazette, by which the City of Buenos Aires adhered to the "Tax Amnesty Regime" that the Argentine Government established by National Law No. 27,260.

This adhesion was carried out within the framework of the Argentine Government's "Tax Amnesty Regime", which promoted a system of voluntary statement of undeclared assets, including local and foreign currency. We refer to Argentina Has Released a New Tax Amnesty Regime published in Marval News No. 162, June 30, 2016.

To promote the "Tax Amnesty Regime" and to release taxpayers from local applicable taxes, the Argentine Government invited the Provinces, the City of Buenos Aires and the municipalities to adhere to the abovementioned regime. 

There are several benefits derived from including undeclared assets in taxpayers' disclosed property:

  1. The referred undeclared assets are not levied of local applicable taxes. Nevertheless, the Tax Authority of the City of Buenos Aires maintains its controlling rights.
  2. Domestic or foreign currency deposits that were made in entities ruled by Financial Entities Law (Law No. 21,526), and Capital Markets Law (Law No. 26,831), will not be subject to withholding of any kind within the City of Buenos Aires.
  3. Acts performed to enroll assets in owner's name are not levied of any local applicable taxes. 

2. The new Tax Moratorium

The City of Buenos Aires, through Law No. 5,616, released a new Tax Moratorium, in similar terms to the one provided by National Law No. 27,260.

Obligations that expired by May 31, 2016 and offences committed by that date are included in the Tax Moratorium. Taxpayers can adhere to the Tax Moratorium as of December 31, 2016.

Benefits derived from being included in the Tax Moratorium:

  1. Suspension of criminal tax proceedings.
  2. Interruption of the statute of limitations (as long as no final judicial decision has been passed).
  3. Pardon of fines arising from formal offences committed until May 31, 2016, not subject to final judicial decision or paid. In order to take advantage this benefit, formal obligation must be fulfilled as of December 31, 2016. 
  4. As long as concepts listed below have not been paid before September 8, 2016 and were related to obligations which expired as of May 31, 2016; or offenses committed as of May 31, 2016:
  • Exemption and/or pardon of fines not subject to final judicial decision.
  • Pardon of compensatory or punitive interest exceeding a certain percentage of the principal obligation. Such pardon runs from 75% for 2010 and previous fiscal years; 50% for 2011 and 2012; 25% for 2013 and 2014; and 10%, for 2015 and up to May 31, 2016.

In order to take advantage of the Tax Moratorium Regime benefits, taxpayers must pay the main obligation, fines and unpardoned interest, by any of the mechanisms provided by law. If this payment is made in one installment, an additional benefit is included: an extra 15% discount on the total amount of accrued interests.

In order to cancel the main obligation, fines and unpardoned interest, payment plans are admitted. The law provides different kinds of fees and funding rates depending on the taxpayer's category.

The payment plan expiration implies the resumption of the criminal procedure and habilitates the City of Buenos Aires' Tax Authority to present the corresponding criminal charges.

The law determines the pardon of surcharges, fines and sanctions without a final decision up to September 8, 2016, if withholding agents adhere to the regime and pay the amount of money not withheld. The very same extinctive and suspensive conditions for the criminal action provided for taxpayers in general, and the same exclusion causals, apply to these cases.

Withholding agents are exempted from liability, regarding omitted withholdings, if taxpayers regularize their situation under this Tax Amnesty Regime.

The Law also admits the inclusion in the Tax Moratorium of tax obligations due by May 31, 2016; and already included in payment plans expired by September 8, 2016. This Tax Moratorium admits the reformulation of payment plans that were valid on September 8, 2016.

Taxpayers that were declared bankrupt, that were convicted for criminal tax proceedings and that were convicted for criminal offenses against the Administration are excluded from the Tax Moratorium Regime.

The City of Buenos Aires Law No. 5,616 empowers the local Tax Authority to establish requirements that were needed for the application of this law: such as requirements to adhere to the regime, the definition of terms such as "valid adhesion", "expiration date", "payment methods", among others.

This is the first Tax Moratorium issued in 13 years. The last Tax Moratorium Regime providing similar benefits to taxpayers was valid between 2003 and 2004 (Tax Moratorium Regime issued by Laws No. 671, and Law No. 1078).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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