Bill of law – Moratorium – Amnesty – Special Regime for Personal Assets Tax.

The National Executive Power has sent the Bill of “Bases and Starting Points for the Freedom of Argentinians” to the National Congress, for its consideration during the extraordinary sessions in the coming weeks.

The key points regarding the tax regulations included in the Bill are as follows:

1. EXCEPTIONAL REGULARIZATION REGIME OF TAX, CUSTOMS, AND SOCIAL SECURITY OBLIGATIONS:

• It will be possible to regularize Tax, Customs, and Social Security obligations (with certain exceptions) that expired before and on November 30, 2023, as well as infringements committed by that date, whether or not they are related to these obligations.
• Individuals who opt for the Regularization Regime will enjoy the following benefits, which vary depending on the payment method and the enrollment date (, in all cases, as from the effective date of the regulations to be issued by AFIP), namely: i) Cash payment and enrollment within 90 consecutive days, forgiveness of 50% of accrued interests up to the enrollment date; ii) Payment in installments and enrollment within 90 calendar days, waiver of 30% of interests; iii) Payment in installments and enrollment, as of the calendar name number 91, waiver of 10% of interests. In all cases, 100% of applied fines will be forgiven.
• Enrollment can be made from the date the regulations issued by AFIP come into effect until 150 calendar days have elapsed from that moment.
• Enrollment in the Regularization Regime will result, among other effects, in the suspension of ongoing Tax, Customs, and Social Security criminal actions and the interruption of the course of criminal prescription. Additionally, the complete payment of the debt will lead to the extinction of the criminal action, provided there is no final judgment at its date. The expiration of the payment plan will imply the resumption of actions or will enable AFIP to file a criminal complaint.

ii. ASSETS REGULARIZATION REGIME:

• Subjects that may enroll include: i) Individuals, undivided estates, and business entities (included in Article 53 of Income Tax Law) deemed as Argentine tax residents as of December 31, 2023; ii) Those who do not qualify as Argentine tax residents based on their assets or income from Argentine sources; and iii) Individuals who were Argentine tax residents before December 31, 2023.
• Enrollment period will be extended until November 30, 2024.
• The applicable tax rates for this Asset Regularization Regime (“ARR”) will be 5% (until March 31, 2024), 10% (until June 30, 2024), and 15% (until September 30, 2024).
• When the total taxable base to be regularized in USD is less than one hundred thousand USD (USD 100,000), a rate of 0% will be applied.
• Any taxpayer declaring his intention to enroll in the ARR must make an upfront payment, equivalent to at least seventy-five percent (75%) of the Special Regularization Tax, within the specified dates corresponding to each Stage.
• The following assets located in Argentina and/or abroad can be declared, among others: i) National or foreign currency, in cash or deposited in accounts, ii) Real estate, iii) Shares and interests in companies, trusts, or other similar assets, iv) Securities, stocks, bonds, among others, v) Movable property, vi) Credits of any nature.
• Individuals who enroll in the ARR will enjoy, among other things, the following benefits to the extent of the declared assets: i) Release from any civil and criminal actions related to tax, exchange, customs, and administrative offenses that would have arisen from the breach of obligations related to the origin of the declared assets, ii) Exemption from the payment of taxes that they failed to pay and which resulted from the declared assets. This includes, among others, Income Tax, Undocumented Foreign Exchange Outflows, Real Estate Transfer Tax, VAT, Personal Assets Tax, and the Solidarity and Extraordinary Contribution to mitigate the effects of the pandemic.
• Individuals or undivided estates may declare those assets subject to the regime, even when they are in the possession, recorded, registered, or deposited in the name of third parties, provided that such third parties have not been among the persons excluded from requesting the ARR.

iii. SPECIAL REGIME FOR THE PAYMENT OF PERSONAL ASSETS TAX

• The Special Regime for the payment of Personal Assets Tax (the “SRPAT”) has been established for fiscal periods until December 31, 2027.
• Enrollment in the SRPAT is individual, voluntary, and can be done until March 31, 2024.
• Once enrolled, they will pay the corresponding PAT for the fiscal periods from 2023 to 2027 in a unified manner. Additionally, taxpayers who choose to join the SRPAT will be exempt from the PAT for the previously mentioned fiscal periods.
• Individuals entitled to join the SRPAT include i) Individuals and undivided estates who are tax residents in Argentina, ii) Substitute taxpayers for Personal Assets Tax (the “PAT”) obligations due to their capacity as such; and iii) Individuals who, as of December 31, 2023, are not deemed as tax residents in Argentina but were deemed as such before that date.
• Taxpayers enrolled in the SRPAT will apply the following tax rates, as the case may be: i) Individuals and undivided estates: 0.75%, ii) Substitute taxpayers: 0.5%, iii) Subjects who have regularized assets under the Asset Regularization Regime: 0.75%. The resulting amount obtained by applying the rate must be increased by a compensatory interest equivalent to 125% of the interest rate applied by the National Bank (Banco Nación in Spanish) for 30-day fixed-term deposits for the period between January 1, 2024, and the day before the payment is effectively made.
• In order to pay the SRPAT, tax credits, advances, and payments on account of the PAT may be offset. Taxpayers must make an initial payment of the SRPAT, on or before March 31, 2024, consisting of an amount not less than 75% of the total tax to be determined.
• The total payment of the tax due on account of the application of the SRPAT must be made by May 31, 2024; if paid after this date, the taxpayer will be deprived of the benefits of the SRPAT.
• Taxpayers who join the SRPAT will enjoy fiscal stability until the year 2038 regarding the PAT and any national tax that may be created when its subject matter affects all or any asset of the taxpayer. In this way, enrolled individuals cannot have their tax burden increased by wealth taxes beyond certain expressly regulated limits.
• The scales to be applied in the IBP for the fiscal periods between 2023 and 2027 are progressively reduced until they reach a rate of 0.5% for all assets.

For further information, please contact:

Liban A. Kusa: liban.kusa@bruchoufunes.com

Ezequiel Lipovetzky: ezequiel.lipovetzky@bruchoufunes.com

Daniela C. Rey: daniela.rey@bruchoufunes.com

Nicolas Nogueira Castellini: nicolas.nogueira.castellini@bruchoufunes.com

Pablo M. Muir: pablo.muir@bruchoufunes.com

Maximiliano Yúdica Bartels: maximiliano.yudica.bartels@bruchoufunes.com

Antu Aguilar: antu.aguilar@bruchoufunes.com

Juan Salvador Mayedonchi: juan.mayedonchi@bruchoufunes.com

Luciana Rodriguez: luciana.rodriguez@bruchoufunes.com