ARGENTINA Law and Practice Contributed by: Juan McEwan and Agustín Lacoste, McEWAN
Regarding upcoming reforms, and in line with the objective of reducing bureaucracy and promoting tax compliance, the government is currently working on a reform bill aimed at creating a more streamlined tax structure. The proposal seeks to consolidate the national VAT, provincial gross income tax ( ingresos brutos ), and municipal levies into a single unified tax. Argentina’s current VAT system is characterised by multiple rates and sector-specific exemptions. Although the specific rate has yet to be determined, the proposed structure would include a revenue- sharing mechanism among the federal, provincial, and municipal governments. Other tax simplification measures currently under dis - cussion include: • consolidating or eliminating minor national taxes, such as the bank transaction tax, which is widely considered distortionary; • adjusting PIT brackets and thresholds to reflect inflation, which has increasingly impacted middle- and high-income earners; and • reducing the corporate income tax rate, which currently results in an effective rate of 39.5% when accounting for both corporate-level taxation and the withholding tax on dividends distributed to shareholders. In addition to the regulatory changes already intro - duced, and as part of its campaign to eliminate bureaucracy, President Javier Milei’s administra - tion has decided to replace the Federal Administra - tion of Public Revenues ( Administracion Federal de Ingresos Publico , or AFIP) with a new agency called the Argentine Revenue and Customs Agency ( Agencia de Recaudación y Control Aduanero , or ARCA). The change aims to modernise tax and customs adminis - tration, improve enforcement, and increase efficiency. ARCA is gradually taking over AFIP’s responsibilities, operating as a more autonomous and specialised institution. 1.6 Transparency and Increased Global Reporting Following the international standards suggested by the OECD, fiscal transparency through controlled for -
eign company (CFC) rules was introduced for the first time in Argentina by Law 27.430 (27 December 2017). Fiscal Transparency for Individuals Fiscal transparency rules apply primarily to individuals who hold shares or have an interest ownership in for - eign companies located in non-cooperative or low or nil tax (LONT) jurisdictions, modifying the moment of recognition of foreign-source income by resident tax - payers. In this way, the income will be recognised as having been earned by an Argentine resident as if the foreign entity does not exist, to the extent that certain conditions are met (control through ownership, lack of “substance”, passive income representing more than 50% of gross income, etc). Fiscal transparency also applies to individuals with interests in foreign trusts/private foundations, provid - ed certain conditions are met (revocable trusts, trusts in which the settlor is also a beneficiary, and trusts in which the settlor keeps direct or indirect control over the structure). These structures are therefore no longer useful for PIT deferral. Global Reporting For the past few years, Argentina has been an active participant in the exchange of international tax infor - mation. In this sense, Argentina has subscribed to: • tax treaties to avoid international double taxa - tion, which are bilateral and include information exchange clauses; • specific tax exchange agreements, which are also bilateral; and • the multilateral Convention on Mutual Administra - tive Assistance in Fiscal Matters proposed by the OECD. In order to fulfil the commitments assumed, AFIP enacted General Resolution No 3826/2015 on 30 December 2015, which established an information regime on financial accounts so that financial institu - tions provide the required information. Through differ - ent communications, AFIP requested that the different entities involved (such as the Argentine Central Bank, the National Securities Commission, and the Superin -
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