New Amendments to the Tax Code of Buenos Aires City

This article briefly describes the substantial changes introduced to the Tax Code of the City of Buenos Aires (the “Tax Code”). These amendments are effective as from January 1, 2010.

1. General Amendments

The following amendments were introduced to the Tax Code:

a) The Tax Authority of the City of Buenos Aires must inform professional associations about raids on professional services firms.

b) Joint and several liability was extended to Joint Ventures (“Unión Transitoria de Empresas”) and Associations between Companies (“Asociación de Colaboración Empresaria”).

c) In the case of instantaneous taxes (i.e., stamp tax) and asset-based taxes (i.e. real estate tax), the statute of limitations does not accrue until the Tax Authority has been informed of the taxable event. However, the Tax Authority cannot claim the payment of the tax, if 10 years have passed as from the first day of January of the year following the taxable event;

d) Any notary public who intervenes in the assignment of certain residential homes and stores must request a certificate issued by the Tax Authority in order to verify the correct registration of the real estate.

2. New Taxes

New taxes were created in relation to the environment:

(i)         Tax on the Generation of Urban Waste (“Impuesto a la Generación de Residuos Sólidos Urbanos Húmedos No Reciclables”); and

(ii)         Tax on the Generation of Arid Waste (“Impuesto a la Generación de Residuos Áridos y Afines”).

3. Turnover Tax

The following exemptions were incorporated:

(i)         The sale of certain used vehicles; and

(ii)         International air transport for passengers, provided a reciprocity agreement in tax matters exists with the home country of the airline;

4. Stamp Tax

The most important amendments to this tax are as follows:

a) The Tax Authority of the City of Buenos Aires may establish a real estate Value of Reference for the real estate located in the city that will reflect the economic value of trade per square meter.

b) Agreements of consecutive execution or periodic payments: The tax must be calculated considering the total term of the agreement (before the amendment of the Tax Code a 5 year term was considered). If the term of the contract is not established, for the purpose of the calculation of the tax, a term of 5 years must be considered.

c) When there are extensions of agreements, the contract will be considered renewed in each period of 5 years until the completion of the contractual relationship. The tax must be paid on each of the extensions.

d) The following acts are exempted:

(i)         Financial instruments and promissory notes that guarantee obligations which have already paid the tax or were exempted in the jurisdiction of execution;

(ii)         Employment of trainees under the trainee regulation; and

(iii)        Loan agreements guaranteed with a mortgage on a real estate located outside the City of Buenos Aires.

e) In the event of lack of compliance with Stamp Tax, the Tax Authority, after first informing the taxpayer, must issue a certificate of debt, which will be considered an enforceable document.