On April 17, 2024, the Executive Branch sent a new Law of Bases and Starting Points for the Freedom of Argentines to the Chamber of Deputies. In this opportunity, the package of tax measures proposed by the Executive Branch will be introduced in a separate regulatory text, called the Bill of Palliative and Relevant Tax Measures (hereinafter, the “Bill”), which was also submitted to the Chamber of Deputies on April 17, 2024.
If passed, the Bill will introduce relevant modifications to the current tax system, including the implementation of a regime for the regularization of tax obligations and a regime for asset disclosure. In addition, the Bill also contemplates amendments to the Personal Assets Tax, Income Tax, Simplified Regime for Small Taxpayers, import and export duties, as well as excise taxes. It also provides for the repeal of the Real Estate Transfer Tax and the creation of the Tax Transparency Regime for Consumers.
The following is a summary of the main aspects of the Bill related to: (i) the tax amnesty regime; (ii) the regime for the regularization of tax, customs and social security obligations (moratorium), (iii) the amendments to the Personal Assets Tax, (iv) the repeal of the Tax on the Transfer of Real Estate, and (v) the amendments to the Income Tax applicable to individuals under employment regime.
- Asset Disclosure Regime
As mentioned above, the Bill includes the introduction of an asset regularization regime. Its main elements include:
i) Main Aspects. Disclosure date and period of adhesion
This regime includes individuals, undivided estates and companies that, as of December 31, 2023, are considered Argentine tax residents, whether or not they are registered as taxpayers before the Federal Tax Authority (hereinafter, the “AFIP”, for its Spanish acronym). Foreign residents may adhere to the regime provided that they have assets located in Argentine territory or Argentine sourced income, except for local or foreign currency in cash.
Individuals who maintained Argentine tax residency prior to December 31, 2023 and who have lost such status as of that date are also included.
Public officials who have performed public functions in the last five years as of the effective date, as well as their spouses, ascendants and descendants are expressly excluded from the regime, as well as those who have been declared bankrupt or who have been convicted of any of the offenses provided for in the Customs Code, the Criminal Tax Regime, among others.
The regime allows for disclosure of local and foreign assets, including but not limited to national or foreign currency, real estate located in Argentina or abroad, shareholdings, trust rights, securities and credits of any nature, cryptocurrencies, cryptoassets and other similar assets.
The Bill foresees the possibility of disclosing assets owned, possessed or held by third parties, provided that such third parties are not excluded from the regime.
Securities or foreign cash deposits are excluded when they are deposited in financial entities or custody agents located in countries classified as High Risk or Non-Cooperative by the Financial Action Task Force (i.e., FATF).
Initial deadline for adhesion was set at April 30, 2025, even though the Executive Branch is entitled to extend such deadline until July 31, 2025. The adhesion to the regime is divided into three stages with different tax effects with respect to the tax to be paid, as detailed in the following section.
ii) Special disclosure tax
The regime introduces a special disclosure tax (hereinafter, the “Tax“), with an applicable rate that will depend both on the date of adhesion to the regime and the total value of the disclosed assets. The Tax shall be calculated and paid in U.S. dollars, except for certain specific exceptions.
The tax amnesty regime provides with no tax to be paid if the total value of the assets to be externalized does not exceed US$ 100,000. Exceeding this amount, the tax rate will be 5%, 10% or 15% depending on the date of adhesion to the regime.
The Bill provides with a mandatory advance payment of 75% of the corresponding Tax at the moment of declaring the adhesion to the regime, while the remaining Tax (plus a compensatory interest) must be paid according to the due dates established in the Bill, which vary according to the date of adhesion.
The Bill also provides with a particular treatment for disclosure of cash, foreign deposits and securities deposited in foreign financial institutions, which could be included in the regime without paying the Tax if disclosed assets are deposited in local bank accounts during a certain period of time, or allocated to certain specific investments as defined by complimentary regulations.
iii) Adhesion benefits
In case of adhesion to the regime and compliance with its conditions, the following benefits would be applicable:
- Release of tax, exchange and customs offenses and infractions arising from non-compliance with the obligations related to the disclosed assets, including any income generated by the disclosed assets, as well as obligations related to the foreign exchange restrictions.
- The taxpayer shall be released from the payment of taxes related to the disclosed assets for previous fiscal periods. This would include Income Tax, Value Added Tax, Extraordinary Contribution to Mitigate the Effects of the Pandemic (Aporte Solidario), Tax on Credits and Debits in Bank Accounts, Tax on the Transfer of Real Estate, among others.
- Exceptional Regularization System for Tax, Customs and Social Security Obligations
Adhering taxpayers are allowed to regularize taxes and social security obligations collected and audited by AFIP, expired until March 31, 2024, as well as any infractions committed until that same date. The regime covers a variety of obligations susceptible to be regularized, among which are included:
- Obligations under administrative or court discussion
- Obligations related to the Extraordinary Contribution to Mitigate the Effects of the Pandemic (Aporte Solidario)
- Obligations of taxpayers as withholding agents
- Obligations for which AFIP’s powers to determine and enforce have expired
- Fines for infringements of the Customs Code, among others
Taxpayers will be able to enroll to the regime since the entry into force of complementing regulations issued by AFIP and up to 150 calendar days following that date.
(i) Benefits according to the payment and date of adhesion
Enrollment to the regime will result in a forgiveness of a portion of compensatory and punitive interests accrued, which shall depend on the date of enrollment and form of payment:
- Pago al contado o en un plan de facilidades de pagos de hasta 3 cuotas mensuales y adhesión al régimen dentro de los 30 días corridos desde la fecha de entrada en vigencia: condonación del 70% de los intereses resarcitorios y punitorios[1].
- Payment in cash or up to 3 monthly installments and adherence to the regime within the period of 31 to 60 calendar days from the effective date: waiver of 60% of the accrued compensatory and punitive interest.
- • Payment in cash or up to 3 monthly installments and adherence to the regime within the period of 61 to 90 calendar days from the effective date: waiver of 50% of the accrued compensatory and punitive interest.
- Payment by means of a payment plan (with more than 3 monthly installments) and adherence to the regime within the first 90 days from the effective date: waiver of 40% of the accrued compensatory and punitive interest.
- Payment by means of a payment plan (with more than 3 monthly installments) and adherence to the regime as from 91 days from the effective date: waiver of 20% of the accrued compensatory and punitive interests.
In all cases, any applicable fines shall be entirely waived.
Fines and penalties corresponding to tax obligations accrued until March 31, 2024, would be automatically waived, to the extent that there is no final ruling and the tax obligation is paid. This waiver would not be subject to additional requirements or conditions established by the regulations.
(ii) Effects
The adhesion to this regime would result in:
- Suspension of criminal tax and customs proceedings in progress and interruption of the criminal statute of limitations even if the criminal complaint has not been filed at that time or even when the criminal process was already initiated, as long as there is no final ruling issued in that case.
- Payment of the debt under the regime would result in the extinction of the criminal action, to the extent that there is no final ruling issued in that case.
- Extinction by operation of law of the criminal action with respect to obligations cancelled prior to the effective date of the regime.
Lack of compliance with the payment plan will cause the resumption of the tax, customs or social security criminal action, as the case may be, or will enable the AFIP to file the corresponding criminal complaint. It will also imply the beginning of the computation of the tax and/or customs and/or social security criminal statute of limitations.
- Personal Assets Tax
The Bill includes substantial changes to the Personal Assets Tax Law, modifying the applicable rates for the tax periods from 2023 to 2027, and establishing a special payment regime by paying the tax in advance.
i) Modification of applicable tax rates
A gradual modification of the progressive scale is provided for fiscal years 2023 to 2027, by progressively reducing the maximum tax rate from 1.50% in 2023 to a unified rate of 0.25% in 2027. Consequently, the current aggravated tax rate for foreign assets is eliminated.
Additionally, those taxpayers who have satisfied all their tax obligations with respect to Personal Assets Tax for fiscal years 2020 to 2022 will be benefited with a reduction of 0.25% in their Personal Assets Tax rate for fiscal years 2023 to 2026.
ii) Special regime for payment of Personal Assets Tax (REIBP)
The Bill introduces a new special tax payment regime (“REIBP”) consisting in an advance payment of the Personal Assets Tax applicable to fiscal years 2023 to 2027. REIBP is intended to be of voluntary and individual adhesion for individuals and undivided estates that are Argentine tax residents as of December 31, 2023., whereas individuals who lost their tax residency as of that date are also eligible, even though adhesion to the REIBP will cause the acquisition of the Argentine tax residence.
Deadline for adhesion to the REIBP was established on July 31, 2024. The Executive Branch may extend such date up to September 30, 2024.
(a) Taxable basis and applicable rates
- In the case of individuals and undivided estates residing in Argentina, the REIBP will determine the applicable tax by considering the entire assets owned by the adhering taxpayer on December 31, 2023, deducting the corresponding non-taxable threshold, multiplied five times, and applying a 0.45% tax rate.
- Special rules apply to determine the taxable base for local residents who disclosed assets under the disclosure regime provided by the Bill. A 0.5% tax rate will be applicable for taxpayers who entered into the asset disclosure regime.
The tax payment under REIBP consists in an initial payment of 75% of the total tax due. The remaining amounts are allowed to be paid through payments plans implemented by AFIP.
(b) Benefits
Taxpayers adhering to the REIBP and complying with conditions set forth therein will be benefited with the following:
- Exclusion from Personal Assets Tax and from any other property tax for fiscal years 2023 to 2027, reaching all aspects of Personal Assets Tax (i.e., advance payments, payments on account, filing of tax returns, etc.).
- Tax stability until 2038 with respect to the Personal Assets Tax and any other national taxes that may be created levied over wealth, expressly prohibiting an increase in the tax burden for wealth taxes beyond certain limits established in the Bill.
- Tax on the Transfer of Real Estate
The Bill provides with the elimination of the Tax on the Transfer of Real Estate as of January 1, 2024.
The Tax on the Transfer of Real Estate is currently levied on the transfer of real estate located in Argentina at a tax rate of 1.5% over the value of the transfer or market price, whichever is higher.
- Income Tax
The Bill attempts to reestablish regulations governing application of Income Tax to local employees receiving income arising from their labor relationships with local employers (known as Fourth Category under Income Tax Law). Non-taxable minimum thresholds are reduced (AR$1,800,000 in the case of single workers and AR$2,300,000, in the case of married people with children) and new scales of progressive tax rates are established, which shall be adjusted pursuant to inflation index (i.e., IPC) as of fiscal year 2025.
The Bill provides with a retroactive application as of January 1, 2024.
[1] The current compensatory interest rate is 15.27% and the punitive interest rate is 17.62% per month.
