Argentina has put an end to the application of double taxation treaties that were in force with the Republic of Chile and the Kingdom of Spain.
The treaties with Chile and Spain were signed in 1976 and 1992, respectively, with the purpose of avoiding double taxation and preventing tax evasion of income and capital taxes.
Pursuant to these treaties, shares and other equity interests in local companies owned by Chilean or Spanish residents enjoy a preferential tax treatment by which Tax on Personal Assets is not applicable. This tax is paid on an annual basis by Argentine companies acting as "substitute obligors" of their shareholders or owners.
Argentina's decision to denounce and, therefore, terminate the treaties with Spain and Chile was published in the Official Gazette of July 13 and 16, 2012, respectively.
A "denouncement" is a unilateral mechanism by which a country which is party to an international treaty is allowed to put an end to it, thus terminating all legal effects emerging from that treaty.
By virtue of the denouncement provisions contained in both treaties, they will cease to have effects as from January 1, 2013.
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