Argentina: Extension Of The Amnesty Program For The Disclosure Of Unreported Foreign Currency

Last Updated: 19 April 2017
Article by Martín Barreiro and Juan Pablo Menna

EXTENSION OF THE AMNESTY PROGRAM FOR THE DISCLOSURE OF UNREPORTED FOREIGN CURRENCY

Executive Order No. 2008/2015 (the "Executive Order") was published in the Official Gazette on September 30, 2015. It extends for a 3-calendar month period until December 31, 2015 the possibility of adhering to the benefit granted by Law No. 26.860 which authorizes individuals or corporations to regularize foreign currency not previously reported with AFIP-DGI.

Remember that by means of Law No. 26,860 it was established an Amnesty Program for the Disclosure of Unreported Foreign Currency (the "Regime") in Argentina and abroad, authorizing the issuance of the following financial instruments, known as "Bono Argentino de Ahorro para el Desarrollo Económico" (Argentine Savings Bond Regime for Economic Development) ("BAADE" – by its acronym in Spanish), "Pagaré de Ahorro para el Desarrollo Económico" (Savings Note for the Economic Development) ("PAPDE" – by its acronym in Spanish), and the "Certificado de Depósito para Inversión" (Certificate of Deposit for Investment) ("CEDIN"- by its acronym in Spanish).

The benefits to be granted by the Regime are subject to the condition that the externalized foreign currency amount be allocated to purchase any of the financial instruments created by the Regime. 

I. BAADE. PAPDE

The Regime authorizes the Argentine Ministry of the Economy and Public Finance to issue the BAADE and PAPDE in U.S. dollars, under the financial conditions to be determined at the time of their issue. The funds generated by it shall be used to finance public investment projects in strategic sectors, such as infrastructure and hydrocarbons. 

II. CEDIN

The Regime authorizes the Banco Central de la República Argentina (Argentine Central Bank) (the "BCRA") to issue the CEDIN in U.S. dollars and shall be a registered, endorsable instrument qualified to pay debts in US dollars.

CEDIN subscription may be processed at the banks listed in the Ley de Entidades Financieras (Financial Entities Law). The certificate shall be cancelled in US dollars only after having verified that it has been allocated to purchase pieces of land, storehouses/warehouses, business premises, offices, garages, plots and parcels of land and dwelling houses already existing and/or to build new dwelling units and/or to the refurbishment of buildings. 

III. Beneficiaries. Exclusions

Individuals, undivided estates of deceased persons, corporations and trust where the trustor (or settlor) is also the beneficiary (excluding financial trusts and trusts in which the trustor-beneficiary is not an Argentine resident for tax purposes) may be eligible to voluntarily externalizing foreign currency holdings in the country and abroad.

Externalization shall include foreign currency holdings in Argentina and abroad as of April 30, 2013. Holdings of foreign currency in the country and abroad resulting from the proceeds of assets existing as April 30, 2013 will also be included within the scope of the Regime.

The following individuals are excluded from the scope of the Regime:

a) Bankrupts not discharged;

b) Those criminally prosecuted or accused under the Criminal Tax Law;

c) Those formally arraigned or criminally prosecuted for minor offenses for having infringed their tax obligations or the obligations of third parties that were subject to final judgment rendered prior to the effective date of the Regime;

d) Those accused of having committed money laundering or terrorism financing crimes, their spouses and relatives up to the second degree of consanguinity or affinity;

e) Corporations, the directors of which have been formally arraigned or criminally prosecuted under the Tax Criminal Law and for minor offenses related to the infringement of their tax obligations or the tax obligations of third parties;

f) Those who hold or have held a public office, their spouses and relatives up to the second degree of consanguinity or affinity, in any branch of the national, provincial, municipal government or the City of Buenos Aires. 

IV. Procedure to implement the disclosure

The benefits to be granted under the Regime are subject to the condition that the externalized foreign currency amount be allocated to purchase any of the financial instruments created by the Regime.

The externalization shall be implemented by the deposit or transfer of funds from foreign countries to those entities listed in the Ley de Entidades Financieras (Financial Entities Law).

In order to enjoy the benefits granted by the Regime, taxpayers must have previously complied with the filing and payment of the relevant income tax, minimum presumed income tax, and tax on personal assets no later than May 31, 2013 corresponding to the fiscal years ended as of December 31, 2012.

Moreover, those taxpayers that decide to avail themselves of those benefits under the Regime shall previously waive promotion of any procedure based on Executive Order No. 1043-1003 (application of the convergence factor to foreign trade transactions) or to demand the implementation of any kind of updating procedures. 

V. Benefits

The underlying benefits are as follows:

a) They shall not be bound to report to the Administración Federal de Ingresos Públicos (Federal Tax Authority ("AFIP") either the date of purchase of the assets that are externalized or the origin of the funds with which they were acquired;

b) Externalized assets are exempt from Income Tax, Value Added Tax as Unreported Income;

c) They are released from any civil, commercial, criminal, tax, administrative and professional actions or proceedings that may correspond to those held liable for violations or infringements punished by the Regime and those that may derive therefrom. The following individuals shall also be exempt therefrom, namely, managing partners and managers of partnerships, directors, managers, statutory auditors and members of supervisory committees of sociedades anónimas (stock corporations) and sociedades en comandita por acciones (partnerships limited by shares) and those holding equivalent positions at cooperatives, trusts and mutual investment funds, and any professionals certifying the respective balance sheets;

d) Exemption from the payment of Income Tax, Tax on Transfers of Title to Real Property of Individuals or Undivided Estates of Deceased Persons, and Taxes on Credits and Debits on Bank Accounts, Excises and Value Added Tax, Minimum Presumed Income Tax and Tax on Personal Assets and the Special Contribution on the Capital of Cooperatives, Tax on Credits and Debits on Bank Accounts and Other Transactions with regard to the taxable amount of the relevant tax; and

e) The AFIP shall be not be bound to file any criminal charges for offenses under the Criminal Tax Law and the BCRA shall not be bound to bring summary proceedings for infringement of exchange regulations and/or file any criminal charges in respect of offenses under the Criminal Exchange Regime, to those individuals adhering to the Regime.

The Regime shall not release financial institutions or other individuals liable for obligations associated with legislation aimed at preventing money laundering, financing of terrorism or other crimes under special laws.

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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