ARGENTINA Trends and Developments Contributed by: Daniel Rinci, Tomas Cabanelas, Fernando García and Marisa Majul, Rinci & Asociados
• Tax losses will now be indexed to consumer price increases, providing meaningful protection against inflationary erosion of carry-forward losses. • The existing exemption for income earned on term deposits for individuals has been extended to foreign currency deposits, a change of obvious relevance to investors holding dollar-denominated savings. • Rental income from residential property is now exempt from income tax, and gains on the sale of real estate are also tax exempt, both changes applying only to individuals. • Foreign individuals who obtain Argentine citizen - ship through investment will not be treated as Argentine tax residents on that basis alone – a clarification that will be relevant for HNW individu - als exploring residency-by-investment structures. Excise taxes abolished Excise taxes on insurance, mobile and satellite tel - ephones, luxury goods, and certain motor vehicles, recreational boats and aircraft are eliminated. The vehicle tax in particular had been in place for over a decade, carrying rates of up to 35% that had long distorted the local car market, creating significant cost The Fiscal Innocence Act introduces a voluntary Simplified Income Tax Return regime for individuals with annual income of up to ARS1 billion (approxi - mately USD700,000 at the time of publication) and total assets below ARS10 billion (approximately USD7 million at the time of publication), verified over the preceding three fiscal years. Under this regime, the revenue authority pre-fills the return, and a taxpayer who accepts and pays it on time is granted a “fis - cal plug” – immunity from civil and criminal claims for that period, except in cases of undeclared invoiced income or the use of fraudulent documentation. Past periods not yet prescribed benefit from a presumption of accuracy, effectively limiting the authority’s ability to reopen them. overruns even for mid-range models. Simplified filing and the “fiscal plug” Individuals enrolled into this system will allegedly be able to deposit cash in banks without tax conse - quences and without being asked about the fund’s origins. The main objective is to get individual taxpay -
ers with undisclosed funds – usually cash – to enter them into the financial system. However, there are small loopholes that could jeopardise this operation’s legality in some cases, especially if a new government rose to power. Shorter limitation periods for compliant taxpayers For registered taxpayers who have filed their returns on time and settled their balances, the statute of limitations for the tax authority to assess and claim taxes is reduced from five years to three. The reduc - tion holds as long as the authority does not challenge the return on the basis of a significant discrepancy – defined as a difference of at least 15% between what was declared and the authority’s assessment, or a difference exceeding the simple evasion threshold, or the use of fraudulent invoices. Provincial and munici - pal taxes will now follow the same limitation periods established under the national Tax Procedure Law, a harmonisation measure that removes the inconsisten - cies that previously existed across jurisdictions. Redraft of the tax crime regime The Fiscal Innocence Act brings perhaps the most structurally significant changes. The monetary thresh - olds at which a tax shortfall becomes a criminal offence have been raised dramatically – in some cases by a factor of 60 or more. Simple tax evasion now requires an underpayment of at least ARS100 million (up from ARS1.5 million), while the threshold for aggravated evasion rises to ARS1 billion. All thresholds will be adjusted annually from 2027 onwards in line with an inflation index, preventing the same erosion in real value that had rendered the old figures so discon - nected from economic reality. Criminal proceedings will also be barred once the revenue authority’s power to assess taxes is prescribed. Mechanisms to resolve criminal exposure through payment have been clarified and made more acces - sible. Full voluntary payment of outstanding tax plus interest before a formal complaint is filed will prevent criminal prosecution altogether – a one-time benefit available per taxpayer. If proceedings have already begun, the action can be extinguished by paying the outstanding amount plus a 50% surcharge within 30 business days of being formally charged.
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