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Argentina: Regulations on certain tax reform aspects

Payment mechanism for non-resident capital gains tax

Through General Resolution 4227, published in the Official Gazette on April 12 2018, the Argentine tax authorities established the long-awaited mechanism to withhold and remit the capital gains tax on transactions involving Argentine securities (i.e. shares, quotas, interest in a local mutual fund, central bank notes, sovereign bonds, etc.), when the seller is a non-resident of Argentina and no exemption prevails.

The newly issued General Resolution establishes that the responsibility to withhold/pay the applicable tax would rely on the following parties:

a) The buyer of the security when considered to be an Argentine resident, except in the situations described in (b) and (c) below;

b) The Argentine custodial institution in the case of yields and capital gains derived from specific securities issued by the Argentine Central Bank (LEBACs) or other securities placed by public offering, which would be required to withhold the tax based on the information available or provided by the broker. If the custodial institution does not intervene in the payment, then the liability would fall on the buyer, unless it is a non-resident, in which case point (d) below would apply;

c) The Argentine depositary institution or the underwriter in the case of interest in a mutual fund, based on information available or provided by the fund manager; and

d) The seller, through its legal representative in Argentina, if the buyer is also a non-resident. In cases where the seller does not have a legal representative in Argentina, the payment should be performed directly by the seller by way of an international wire transfer.

When there is a withholding agent or local party involved in the transaction (i.e. resident buyer or custodial institution or there is a seller's legal representative in Argentina), the Resolution provides that the tax must be reported and paid through the ordinary procedure established for reporting and paying withholding taxes on cross-border payments (i.e. payment should be made on a bi-weekly basis using an online system called SIRE available on the tax authorities' website).

In those cases where the withholding tax must be paid directly by the non-resident seller (i.e. when the buyer is also a non-resident and the seller does not have a legal representative in Argentina), an international wire transfer in US dollars or euros must be made within 10 working days following the date on which the taxable transaction took place. To this end, the swift order must include the information established in the Resolution. The above information along with the list of authorised financial institutions to collect the tax is available on the microsite 'Pago por Transferencia Bancaria Internacional' (in English, 'payment by international wire transfer') available on the Argentine tax authorities' website ( The transfer will be rejected if it is made through 'home banking'.

It should be noted that if the transfer is made after the envisioned due date, interest would apply.

With respect to the tax computation, when the seller opts to determine the taxable gain based on the 'net gain' mechanism, it should inform the withholding of that situation (or eventually its legal representative in the country) and provide all the necessary documentation supporting the acquisition and subsequent sale of the securities as well as the calculation of the tax basis of the securities including, if applicable, its indexation.

Note that the tax basis in case of securities acquired after January 1 2018 can be updated based on an indexation rate periodically published by the authorities. Also, in cases where the securities were acquired before the enactment of the reform, and where the corresponding gain was not subject to tax before the reform, the tax basis to consider in a subsequent sale would be its purchase price or market value as of December 31 2017, whichever is the higher.

Transactions concluded between September 23 2013 and December 31 2017

In cases of on-market transactions, payment must be made by the Argentine buyer or intervening Argentine compensation/liquidation agent but only when such agents have withheld the tax. In both cases, the tax must be reported and paid through the ordinary procedure established to report and pay withholding taxes on cross-border payments.

In cases of off-market transactions, payment must be made by the non-resident buyer through an international wire transfer following the procedure previously described.

The Resolution provides that the due date to pay the tax applicable to those past transactions will be between June 11 and June 13 2018.

Entry into force

The provisions of this General Resolution entered into force on April 26 2018 and will apply to (i) transactions concluded on or after September 23 2013 (with respect to taxable transfers of shares/quotas); and (ii) taxable transactions made by foreign beneficiaries on any other securities since January 1 2018, in this latter case where the relevant withholding tax agent withheld the tax (there would remain a grey area and conflicting views between scholars around the applicability of this mechanism for transactions concluded between two non-resident parties from January 1 2018 to April 25 2018).

For transactions concluded before April 26 2018, the due date for paying the tax will be between June 11 and June 13 2018.

Argentina increases tax on financial transactions credit

The tax on financial transactions is levied at a 0.6% rate on any Argentine bank account movement (i.e. deposits and withdrawals).

Since inception, there has been a portion creditable against income tax and minimum notional income tax as well as their respective advanced payments amounting to 34% of the tax paid on credits or 17% of the tax paid in the specific cases in which the tax rate was 1.2% due to movement of funds without using Argentine bank accounts.

Now, through Decree 409/2018, the creditable amount has been increased to 33% of the 0.6% tax paid on debits and on credits and of the 1.2% tax paid on the movement of funds described above.

If those specific cases (i.e. not-for-profit organisations exempted for income tax purposes) in which the tax on financial transactions applies at lower rates the credit is limited to 20% of the debits and credits in Argentine bank accounts.

Also, the amount creditable is increased from 50% to 60% for those manufacturing companies that benefited from the regime established by Law 27.264 (specific tax treatment for small or medium-sized enterprises (SMEs)).

This measure covers the tax on financial transactions paid since January 1 2018 and the incremental credit amount can be used against the income tax and/or minimum notional income tax and their respective advanced payments corresponding to fiscal periods starting on or after the same date – January 1 2018 – (thus the first incremental credit timing would be June 2018).

Ignacio Rodríguez

Ignacio Rodríguez (, Buenos Aires
Tel: +54 11 4850 6714

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