Executive Branch Submits Bill to Congress Incorporating Amendments to Taxes and Establishing Moratorium and Tax Amnesty Regimes

 

1. First Section: Moratorium

Chapter I of the Bill creates an Exceptional Regime for Regularizing Tax, Customs, and Social Security Obligations.

The main aspects of the regime are:

1. Obligations that may be included in the regime

This chapter includes the obligation that expired before to November 30, 2023, and the infractions committed up to that date, even if they are in the course of an administrative or judicial discussion. It expressly includes the obligations arising from the framework of the Solidarity and Extraordinary Contribution Law (Ley del Aporte Solidario) and the liabilities of the withholding and collection agents who have omitted to withhold or collect, or the amounts that—having been withheld or collected—were not deposited after the deadline. Customs-related fines -except for smuggling misdemeanors- that are not calculated upon claims on import or export duties and taxes are also included.

2. Exclusions

Those excluded from the Regime are the ones convicted for any of the offences in the Customs Code or in the criminal tax laws (previous and in force) or for common offences related to the breach of their tax obligations. This includes legal entities in which partners or representatives have been convicted under any of these regulations if the conviction becomes final. Likewise, certain obligations are expressly excluded, for example, contributions to the Federal Social Security System or the special social security regime for domestic service employees, debts for contributions to workers’ compensation insurers (ART), obligations and infractions related to promotional regimens, etc.

3. Benefits of the Regime

The benefits depend on the way the debts are paid:

Cash payment and inclusion into the Regime within the first 90 calendar days as from AFIP’s regulations would have 50% forgiveness of compensatory and punitive interest.

Regularization in an installment plan and inclusion into the Regime within 90 calendar days as from AFIP’s regulations would have 30% forgiveness of compensatory and punitive interest.

Regularization in an installment plan and inclusion into the Regime from 91 calendar days as from AFIP’s regulations would have 10% forgiveness of the compensatory and punitive interest accrued on the date of adhesion to the Regime.

4. Other benefits

In the three cases mentioned above, 100% of the applicable fines would be forgiven.

Entering the Regime results in the suspension of ongoing tax and customs criminal proceedings and the interruption of the statute of limitations. The total cancellation of the debt would result in the extinction of the criminal action if there is no final judgment by the date of cancellation.

 

5. Conditions of the installment plan

Individuals: must make a payment on account equivalent to 20% of the debt and pay the rest of the debt in up to 60 monthly installments.

Micro and Small Entities: must make a payment on account equivalent to 15% of the debt and pay the rest of it in up to 84 monthly installments.

Medium-sized Entities: must make a payment on account equivalent to 25% of the debt and pay the rest of it in up to 60 monthly installments.

Rest of taxpayers: must make a payment on account equivalent to 30% of the debt and pay the rest of it in up to 36 monthly installments.

The financing interest rate is calculated based on the rate set by Banco de la Nación Argentina for commercial discounts.

 

6. Extension of the benefits for those obligations cancelled before the Law becomes effective

The Regime extends the forgiveness of fines and penalties that have not been paid or have a final judgment regarding infringements committed or accrued up to November 30, 2023, to those cases in which:

(i) Regarding formal fines, the formal obligation is fulfilled before the end of the period to join the Regime (whenever possible). If this is not possible,  they are waived ex officio

(ii) Regarding substantial fines and penalties, if the principal obligation has been cancelled before November 30, 2023.

All compensatory and/or punitive interests corresponding to tax obligations cancelled before November 30, 2023, are also forgiven.

7. Extension of the extinction of the criminal action to obligations cancelled before the Project

 

The Regime extends as a full right the benefit of extinction of the criminal action regarding the obligations cancelled before the Project, as long as there is no final judgment.

 

8.  Deadline to adhere to the Regime

The deadline is 150 calendar days as from the date the regulations of the Law AFIP will issue becomes effective.

1. Regulation of the Regime

AFIP must approve the general resolution regulating the details of the Regime within 15 calendar days from the date the law becomes effective.

The Bill expressly provides that:

• The regulations may not establish any restriction or limitation on taxpayers, of any kind, for adhering to the Regime.
• No formal infringement may be considered a cause for losing the benefits the Regime grants.
• Adhering to the Regime may not be considered a negative indication of the taxpayer's qualification for the purposes of any registration before AFIP.

 

2. Second Section: Tax Amnesty

Chapter II of the Bill creates a voluntary disclosure regime of assets (Tax Amnesty Regime). Its main aspects are:

1. Taxpayers qualifying for adhesion

Individuals, undivided states and companies, Argentinian residents (taxpayers or not) or non-residents (for assets in Argentina or income from Argentinian sources and with less benefits) may adhere to the Tax Amnesty Regime.

In the case of non-residents who have lost Argentine tax residence as of December 31, 2023, they may opt for the same treatment as residents, in which case these subjects will be considered to have reacquired Argentinian tax residence.

2. Excluded taxpayers

Public officials, their spouses, ascendants, and descendants may not adhere to the Tax Amnesty Regime.

The Bill also excludes, among others, those convicted for any of the offences in the Customs Code or in the criminal tax laws, or for common offences related to the breach of tax obligations; legal entities whose partners or representatives have been convicted under any of these regulations if the conviction is final; and those prosecuted for certain crimes

3. Deadline to adhere and stages.

The declaration of accession can be filed until November 30, 2024. The date of declaration of accession determines the stage applicable to the taxpayer and/or to the assets disclosed at that stage.

After the declaration of accession, a statement of the Tax Amnesty Regime must be filed within the deadlines established for each stage.

The regime is divided into three stages:

Stage	Deadline to adhere and make advance payment	Deadline to file the statement of the Tax Amnesty Regimen and pay Special Disclosure Tax	Special Disclosure Tax Rate
1	From the day following the entry into force of AFIP regulations until 3/31/2024, inclusive.	5/31/2024, inclusive	5%
2	From 4/1/2024 until 6/30/2024, both inclusive	8/31/2024, inclusive	10%
3	From 7/1/2024 until 9/30/2024, both inclusive	11/30/2024, inclusive	15%

4. Assets Included

The regime contemplates disclosing a wide variety of assets in Argentina and abroad, which are owned or found in the possession or custody of the subject adhering to the regime as of December 31, 2023 (Disclosure Date). Among them: national or foreign currency, real estate, corporate participations, benefits from trusts, securities, other personal property, credits of any nature, rights and intangible assets, other assets which economic value can be established and crypto-assets.

Taxpayers adhering to the Tax Amnesty Regime can disclose even those assets in possession registered or deposited under the name of third parties, as long as these third parties are not excluded from the Tax Amnesty Regime.

5. Excluded assets

They include foreign currency or securities deposited in financial entities or custody agents based or located in jurisdictions identified by the FATF as High Risk or Non-Cooperative, or cash located in the same jurisdictions.

6. Special Disclosure Tax

Adhering to the Tax Amnesty Regime involves the application of the Special Regularization Tax, the tax base of which is the total value of the disclosed assets. This is calculated in USD.

The applicable exchange rate for calculating the tax base will be established by regulations of the Executive Branch, using as reference the implicit exchange rate that arises from dividing the last price of a certain public security settled in ARS in the priority price time segment in the Argentine stock market (BYMA) and the last price of said security with settlement in USD in local jurisdiction the day before the Disclosure Date. The Executive Branch may set the exchange rate up to 30% above the official exchange rate the Argentine Central Bank (BCRA) published for the Disclosure Date in Communication “A” 3500 (wholesale).

The Bill provides for the applicable valuation according to each type of asset.

Exclusions from the tax base and different Special Disclosure Tax payment methods are provided in certain cases of deposits in Special Regularization Accounts created for the regime.

The tax rate is 0% for assets below USD 100,000. Once this amount is exceeded, the rate varies between 5% and 15% on the excess, depending on the applicable stage. In case of regularization in several stages, the 0% rate only applies at the first opportunity.

To determine the tax rate, the assets the taxpayer, their ascendants, descendants, and spouse disclosed will be considered jointly.

The Special Disclosure Tax must be determined at the time of filing the statement of the Tax Amnesty Regime and paid before the dates for each stage. However, the Bill provides for an advance payment of no less than 75% of the total tax.

Payment of the Special Disclosure Tax must be made in USD, with the exceptions that may be established by regulations for assets in Argentina.

1. Disclosure of national or foreign cash

The Bill establishes that, to disclose cash in Argentina or abroad, it must be deposited in financial entities regulated by Law 21526 or in a foreign banking entity, respectively.

The BCRA will regulate a special bank account for receiving these deposits (Special Regularization Account). Taxpayers may also request broker dealers to open Special Regularization Client Accounts.

The Bill provides specific regulations for applying the Special Disclosure Tax to cash currency in Argentina or abroad that is disclosed and deposited in a Special Regularization Account. The amounts deposited or transferred to a Special Regularization Account are not levied by the Special Disclosure Tax as long as they remain in those accounts.

If the amounts in a Special or Client Regularization Account are transferred to another account, the financial entity must withhold (with some exceptions) the Special Disclosure Tax.

The withholding rate varies depending on the applicable stage and the moment the amounts are transferred:

1. before 120 calendar days from the deposit in the Special Regularization Account: aggravated rates of 8.75%, 17.5%, and 26 .2% for Stages 1, 2, and 3 respectively,

2.  after 120 calendar days from the deposit in the Special Regularization Account and until 12/31/2025, inclusive: general rates of 5%, 10%, and 15% for Stages 1, 2, and 3 respectively,
3. after 1/1/2026: no withholding would be made.

No withholding would apply to transfers between Special or Clients Regularization Accounts, even if they belong to different owners.

These provisions also apply in the case of securities deposited in foreign accounts, which are sold, redeemed, or liquidated, and the resulting amount resulting is transferred to a Special or Client Regularization Account.

2. Benefits of the Tax Amnesty Regime

Adhering to the Tax Amnesty Regime involves the following benefits, (to the extent of the declared assets):

1. Release from paying omitted taxes originating from the disclosed assets:
   1. Income Tax, tax liability arising from expenses incurred without proper documentation, Real Property Transfer Tax, and Tax on Credits and Debits in bank accounts with respect to the disclosed assets and on the funds that would have been used for the acquisition of these assets.
   2. Excise Tax and VAT on operations that originated the funds with which the disclosed asset was acquired or on cash funds that are regularized.
   3. Personal Assets Tax, Solidarity and Extraordinary Contribution to help mitigate the effects of the pandemic, and Special Contribution on the Capital of Cooperatives, with respect to the tax caused by the increase in assets, assets subject to tax or taxable capital, as appropriate.
   4. Taxes mentioned in the preceding paragraphs that may be owed for fiscal periods prior to the one ending on December 31, 2023, for the disclosed assets.
2. Release from any potential claim or penalty, even under criminal tax law, criminal foreign exchange law, criminal and custom law, and administrative infringements that for failing to fulfill legal obligations related to the disclosed assets, their profit, and the funds that would have been used for their acquisition, as well as the collection and settlement of foreign exchange from the disclosure of said assets.
3. The benefits listed will also be applicable to assets or possessions prior to December 31, 2022, not declared, for subjects who disclose assets they possessed as of December 31, 2023, through the Tax Amnesty Regime added to those disclosed in their respective tax return of the fiscal years completed until December 31, 2022, inclusive. This benefit does not apply to non-resident taxpayers. The regulations will establish a minimum threshold of undisclosed assets, beyond which this benefit declines.

The Tax Amnesty Regimen does not include a pardon for breaching money-laundering legislation.

 

3. Third Section: Personal Assets Tax

 

The amendments include a Special Regime for paying Personal Assets Tax and amendments to the Personal Assets Tax Law.

 

1. Special Regime

This would be an optional and voluntary regime applicable to the 2023 to 2027 fiscal years. Individuals and undivided estates in Argentina, as well as companies and trustees acting as substitute taxpayers, may apply for this Regime until March 31, 2024.

Under this Regime:

1. For individuals and undivided estates in Argentina: what would be considered are the assets as of December 31, 2023, which would be valued according to the general rules of the tax. Some exemptions and the non-taxable minimum would be deducted. Securities and bonds would only be deducted if they were among taxpayers’ assets before December 10, 2023. The resulting amount would be multiplied by five and a 0.75% tax rate would be applied to it.
2. For companies and trustees acting as substitute taxpayers, the amount to be paid would be assessed on the basis of the last financial year closed before January 1, 2024. A compensatory interest of 125% of the interest rate established by the Banco de la Nacion Argentina for 30-day-fixed-term-deposits would apply for the period between the closing of the financial year and December 31, 2024. The resulting amount would be multiplied by five and a 0.5% tax rate would be applied to it.

The project establishes an initial payment of at least 75% of the total of the Regime to be paid until March 31, 2024. The balance must be paid before May 31, 2024.

If, after filing the tax return under this special regime, it turns out that the initial payment is less than 75% of the total owed, the taxpayer may choose to:

1. remain under the special regime by paying the balance increased by 100%;
2. leave the special regime and its benefits and offset the initial payment with other taxes.

The project also establishes that tax credits, and payments on account of the tax corresponding to the 2023 tax period can be used for the payment under the special regime. A compensatory interest of 125% of the interest rate established by the Banco de la Nacion Argentina for 30-day-fixed-term-deposits- would apply for the period between January 1, 2024, and the day before the payment, of the total amount under the special regime and the tax credits and payments on account that are computed against it.

Taxpayers with a reduced tax base (up to ARS 220,000,000) will pay a fixed amount of ARS 1,650,000 for all items related to the Regime.

Taxpayers who apply for the Regime would be excluded from all obligations involving the tax for the 2023 to 2027 tax periods. In other words, such taxpayers would not have to file tax returns, assess, or pay the tax or its advance payments.

The Regime also includes a ‘fiscal stability’ benefit until the 2038 for taxpayers applying for the Regime regarding the tax and any other national tax created or intended to be levied on all or any of the taxpayer’s assets, preventing the increase in the fiscal burden for assets taxes. The taxpayer’s tax burden would not be increased by asset taxes (whatever their name) exceeding the tax burden resulting from applying the 0.75% tax rate for fiscal periods 2023 to 2027 and 0.5% tax rate for fiscal periods 2028 to 2038, on the value of the assets considered for the Regime.

If this limit is exceeded, the taxpayer may reject any claim for those amounts that exceed the limit. If, however, the taxpayer must pay an amount above the limit, he or she may use the excess for fiscal stability purposes, to offset any assets tax or any other national tax.

2. Amendments to the Personal Assets Tax Law

The Bill amends the Tax Law: it repeals the differential and increased tax rate for assets abroad and establishes a progressive reduction of the applicable tax rate to 0.75% as of 2027. The Bill also eliminates the possibility of ‘repatriating’ part of the assets located abroad to access the reduced rate currently applicable to assets in Argentina.

The tax rate would vary depending on the total value of the assets that exceed the non-taxable minimum:

1. 2023: from 0.50% to 1.50%,
2. 2024: from 0.50% to 1,30%,
3. 2025: from 0.50% to 1.10%,
4. 2026: from 0.50% to 1%,
5. 2027: 0.5%.

Finally, the bill establishes compensatory interests:

1. In favor of the taxpayer for the advance payments and payments on account made as from January 1, 2024, and until the due date for filing the corresponding tax return.
2. In favor of the Tax Authorities for the amount resulting from subtracting the advance payments and payments on account made until December 31, 2023, from the tax determined for the 2023 tax period, applying said interest between January 1, 2024, and the day before the due date for filing the tax return, and in favor of the taxpayer if the tax return for the 2023 tax period results in a positive balance, applying said interest between the due date of such tax return and the date on which the balance in favor may be offset against other obligations.

 

4. Fourth Section: Excise Taxes

The text of the Bill proposes amendments to Excise Taxes Law, with effects as from the date the law becomes effective.

The Bill would add a new article to the Excise Taxes Law stating that when taxpayers report a sale price inadequate for determining the tax basis, it will be established according to information the entity or Organism to be appointed by the Ministry of Health publishes. It will be presumed that the sale price is inadequate when is it is at least 20% lower than the price such entity reports. This provision will not apply if taxpayers duly demonstrate that the sale price for consumers is marketable.

Moreover, tax rate for cigarettes is increased. The Bill establishes that the taxes’ minima amounts will be reinstated by inflation, using the Consumer Price Index. The Executive Branch will be entitled, under certain circumstances and on a non-permanent basis, to increase these minima amounts up to 25% or to decrease it up to 10%.

The bill establishes a 25% tax for persons selling devices providing nicotine with tobacco, when duly authorized for commercialization.

5. Fifth Section: Abrogation of the Tax on Sale of Real Estate Property

The 1,5% tax levied on the sale of real estate property for natural persons and undivided states –applicable to property acquired up to 12/31/2017–would be repealed.

6. Sixth Section: Custom Duties

 

1. Export duties

The Bill proposes setting export duties to a 15% rate for all definitive exports of goods classified under the Mercosur Common Nomenclature with a tax rate lower than 15% or not subject to export duties. The rate for exports of hydrocarbons, mining products, and other goods already subject to a higher tax rate would remain.

The Bill also proposes a tax hike for soy derivatives, raising the export duties tax rate from 31% to 33%. An 8% export duty rate is proposed for the wine industry and lemon essential oils.

The Bill authorizes the Executive Branch to set export duties rates from 0% to 15% until December 9, 2027.

The Bill also proposes a 0% export duty rate for: olives, rice, bovine leather, dairy, fruits, vegetables, beans, lentils, chickpeas, potatoes, garlic, garbanzo beans, honey, sugar, yerba mate, tea, horses, and wool.exportacion

 

2. Import duties

 

The Bill proposes repealing the import duties on sugar products established in Law 25715 and the special regime and exemptions on imports the Police of the Province of Buenos Aires carries out following Law 21770.

 

The Bill also proposes eliminating the tax and formalities applicable to imports of personal belongings brought by Argentinian travelers into Argentina.

 

 

 

7. Seventh Section: Tax Information for Consumers

 

Through the Bill, the Executive Branch is proposing to amend article 39 of the VAT Law, and business will have to split VAT and other taxes in their invoices to Final Consumers or related to exempted sales.

Moreover, the bill prohibits using the words “for free” or similar in the advertising of events organized by any level of government to which people can freely access. In these cases, the Bill establishes that it should say instead that the free access is financed by taxpayers.

 

8. Eighth Section: The Executive Branch Left It Blank

 

9. Ninth Section: Other Tax Provisions

The Bill also:

1.  Modifies the Solidarity Tax regarding exempt entities. Thus, it incorporates an exception to the assumptions that were already established:

1. it maintains that the Solidarity Tax does not apply to certain public entities and bodies,
2. it incorporates that such entities will be taxable if they carry out insurance operations.

 

Regarding the destination of the funds, the Bill states that all 100% will be sent to the Argentine Social Security Administration programs and to certain benefits the National Institute of Social Services manages for retirement and pension regimes.  

 

2.  Enables AFIP to, under certain circumstances, discontinue certain proceedings where it claimed the restitution of certain benefits provided by the Federal Government during the pandemic.

 

3. Establishes that financial institutions, entities managing debit, credit, and similar cards, and processors of electronic means of payment must withhold taxes, as provided by the federal or local authorities, only if the payments they process exceed certain monthly thresholds.