ARGENTINA Law and Practice Contributed by: Juan McEwan and Agustín Lacoste, McEWAN
1. Tax 1.1 Tax Regimes
tled. A tax credit will also be permitted with regard to a similar tax paid abroad. PIT – Amendments to Legislation More than five years have passed since the enact - ment of Law 27.430, which incorporated significant changes and had a great impact on high net worth individuals and families due to the taxability of finan - cial investments and the inclusion of fiscal transpar - ency through the controlled foreign company rules. However, through the enactment of Law 27.541, exemptions for certain Argentine-sourced income has been re-established, such as: • income derived from the allocation of capital in public securities issued by the national, provincial, municipal or City of Buenos Aires governments, negotiable obligations, debt securities, bonds and other securities, as well as from participations in mutual funds; and • interest from savings accounts and fixed-term deposits in national currency, capital gains from public securities issued by the national, provincial, municipal or City of Buenos Aires governments, and participations in mutual funds and financial trusts. Section 130 of the ITL establishes that certain foreign structures (companies or other entities or contracts such as trusts) will be considered “transparent” for tax purposes if they meet certain requirements. To that end, the ITL establishes three categories of entities: • trusts, private interest foundations and similar structures established or domiciled abroad; • companies without fiscal personality; and • companies with fiscal personality. Trusts and Private Interest Foundations The ITL establishes that fiscal transparency will apply to trusts, private interest foundations and similar structures if an Argentine tax resident exercises con - trol over the structure – ie, when there is evidence that the assets remain in its possession and/or are admin - istered either directly or indirectly by the tax resident – in the following cases, among others:
The Argentine tax regime functions at the three levels of government: federal, provincial and municipal. The most relevant taxes at federal level levied on individu - als are income tax and personal assets tax – although there are other taxes that, albeit normally irrelevant, may have an impact on wealth structuring. Personal Income Tax Individuals residing in Argentina are subject to person - al income tax (PIT) on worldwide income. In summary, the following are regarded as Argentine residents: • Argentine citizens, whether native or naturalised individuals; • foreign individuals who have obtained perma - nent residency status in Argentina or have been in Argentina with temporary authorisation for 12 months (provided that temporary absences do not exceed 90 days); and • undivided estates in which the decedent was Argentine domiciled on the date of their death. In the case of individuals, the Income Tax Law (ITL) establishes a progressive scale consisting of two con - cepts: • a fixed tax value; and • a variable rate (from 5% to 35%). However, the ITL applies a differential treatment to profits derived from the sale of bonds, stocks, other securities and real estate, and income derived from dividends distributed by Argentine entities – at rates of 7% or 15%, respectively. For transfers of real estate, a 15% rate of PIT applies to the extent that the real estate was acquired on or after 1 January 2018. Where the real estate being sold was acquired prior to 1 January 2018, a 1.5% with - holding tax (real property transfer tax ( impuesto a la transferencia de inmuebles , or ITI)) will apply. PIT is an annual tax and the tax return must be filed in mid-June of the year following the tax period set -
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