The AFIP’s conclusion regarding not applicability of Income Tax to the sale of amortizable personal property with impact over stock sale tax treatment

The file was initiated by a binding consult brought by a taxpayer regarding the tax treatment that must be given to the sale of an aircraft used for the service of air transportation of passengers. The taxpayer understood that the gain arising from the sale of an aircraft was not levied with IT since Law No 25,556 (passed in 12/28/2001) had revoked section 2 subsection 3) of the Income Tax Law (ITL) that levied that type of income.

The original drafting of section 2 subsection 3) established that gain derived from the sale of amortizable personal assets was levied with IT, disregarding who obtained the gain. In March 2001, Law No 25,414 amended subsection 3) and levied the income derived from sale of stock and other securities. However, in December 2001, Law No 25,556 revoked Law No 25,414 and from that moment it was not clear if section 2 subsection 3) of ITL had been completely revoked or if its’ original draft had reemerged. This doubt was specially focused on stock sale.

To answer the consult, the AFIP invoked a General Attorney’s ruling 351/2003 issued on July 3, 2003 in which it was concluded that section 2 subsection 3) was revoked by Law No 25,556, but that fact did not mean the reemerging of its’ original drafting. Thus, the General Attorney understood that section 2 subsection 3) does not exist from fiscal period 2002.

The AFIP pointed that the interpretation of laws and/or regulations performed by the General Attorney are binding and should be followed by all legal services that are part of the State Legal Advisors (Cuerpo de Abogados del Estado).

The opinion of the AFIP, as it is shown in this Note, is that income derived form the sale of amortizable personal assets, stock, bonds and other securities obtained by resident individuals that do not perform these activities regularly are not levied with IT.

This AFIP’s ruling is relevant since from the legislation amendments referred, authors analyzed the effects produced by Law No 25,556 with different opinions in this respect. There are also judicial precedents that dealt with the subject but they lack coherence with ruling 351/03 of the General Attorney.

Note No 1655/06 clarifies the situation and shows the criterion the AFIP will follow in this respect since submit itself to the referred ruling of the General Attorney, ratifying that it will not claim IT for earnings derived from the sale of amortizable personal assets, stock, bonds and other securities performed from fiscal year 2002.