Argentina: New Significant Pieces Of Legislation In Force: Tax Reforms And Anti-Bureaucracy Reforms In Argentina

Last Updated: 25 January 2018
Article by Mario Eduardo Castro Sammartino

Delving into the transformation of Argentina´s business environment and legal framework, making them more business-friendly and efficient, two new pieces of legislation have just come into force, reforming tax regulations and easing bureaucratic burdens. Following, we will briefly list some of the introduced tax reforms and anti-bureaucracy reforms in Argentina.

1. Tax reforms

On 29 December 2017, Law Number 27,430 was published in the National Official Gazette 1, introducing huge tax reforms with the aim of modernizing the tax system, improving the local companies´ competitiveness and reduce the federal government fiscal deficit.

Significant amendments have been introduced to the Income Tax Law, the Value Added Tax Law, and other taxation regulations (e.g.: excise taxes, oil taxes, taxation on individuals, social security contributions, etc.), the procedural tax law, the customs code, and certain accounting regulations.

Some of the amendments are:

a) The definition of what constitutes a permanent establishment in Argentina for determining the taxable presence of foreign companies developing activities in the country;

b) Acknowledgement of inflation for tax purposes, within certain conditions;

c) A corporate income tax rate cut from the former 35% to 30% for fiscal years 2018 and 2019, and to 25% for fiscal years 2020 and onwards;

d) The reinstatement of the income tax on dividend/profit distributions, with a tax rate of 7% for fiscal years 2018 and 2019, and 13% for fiscal years 2020 and onwards. Together with the amendment detailed in c), this tax on dividend/profit distributions encourages the reinvestment of profits;

e) The non-residents capital gain on the disposal of shares will be tax exempted when such shares are publicly traded in stock exchanges under the supervision of the Argentine Securities and Exchange Commission, as long as the foreign beneficiaries do not reside in, or the invested funds do not come from, "non-cooperating" jurisdictions;

f) Taxation of indirect transfers of Argentine assets – including shares – made by non-residents under certain conditions;

g) The abrogation of the equalization tax;

h) Changes in the thin-capitalization rules for the deduction of interest arising from financial loans;

i) VAT will be levied on digital services provided by foreign companies that are used in Argentina (e.g., downloading of videos, music, games, or similar services).

2. Red tape reforms

By the Necessity and Urgency Decree Number 27/2018, published in the National Official Gazette on January 11th, 20182, the Executive Power has introduced significant amendments to current regulations with the aim of slashing federal government red tape and simplifying many business obligations. Some of the introduced measures of specific interests for companies are:

a) Corporate

(i) Nominal and hidden partners are not allowed under corporate law, and both the hidden and apparent partners will be unlimited and jointly liable in a subsidiary way (General Companies Law Number 19,550, Articles Number 34 and 35);

(ii) Corporate books are allowed to be kept by digital means (General Companies Law Number 19,550, Article Number 61);

(iii) Simplified corporations

Their corporate purpose may be broad and comprehend plural activities, with no need to list the included activities, which may be related or not among them (Law Number 27,349, Article Number 36, Sub-Article 4).

Simplified corporations are now allowed to offer their shares publicly in the capital markets and stock exchanges3.

b) Trademark and patent procedures

Trademark and patents' registration procedures are made simpler.

Oppositions to trademark registration must be electronically filed. Failing the parties to agree on the opposition lifting or trademark petition amendment, the National Direction of Trademarks will rule on the matter; such decision may be challenged with the Civil and Commercial Appellate Court, within 30 business days as of notification (Law Number 22,362, Articles Number 16 and 17).

Trademark holders must now file, after the fifth year as of concession and before the expiration of the sixth year, a sworn statement of use to avoid the possibility of the trademark being declared expired (Law Number 22,362, Article Number 26).

c) Public procuring

Public tenders´ publicity is simplified.

d) Securities

It is now allowed the digital deliverance, endorsement, guarantee, and acceptance of bill of exchanges, checks, and promissory notes

e) Contract of insurance

The insurance contract may only be proved by a written instrument. However, all means of proof – included digital means – will be admitted if there is any preliminary written proof of the agreement (Insurance Law Number 17,418, Article Number 11).

Footnotes

1 http://servicios.infoleg.gob.ar/infolegInternet/anexos/305000-309999/305262/norma.htm

2 http://servicios.infoleg.gob.ar/infolegInternet/anexos/305000-309999/305736/norma.htm

3 To know more on simplified corporations, please, read on our Legal Blog: http://cspabogados.com.ar/en/best-legal-vehicle-to-do-business-in-argentina/

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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Authors
Mario Eduardo Castro Sammartino
 
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