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Argentina Planning to Suspend Corporate Tax Rate Reduction and Introduce Tax on Foreign Currency Purchases — Orbitax Tax News & Alerts

On 17 December 2019, Argentina's government reportedly submitted a draft bill in Congress that would suspend the reduction of the corporate tax rate to 25% that is scheduled from 1 January 2020. The reduction of the corporate tax rate was approved as part of the 2018 tax reform law (Law 27,430 of 2017), which included a reduction from 35% to 30% from 2018 and the scheduled reduction to 25% from 2020. If approved, a related increase in the withholding tax rate on dividends from 7% to 13% from 1 January 2020 would also be suspended, which applies for branch/PE profit remittance as well.

Further to the rate change suspension, the government also submitted a draft bill for the introduction of a temporary 30% tax on foreign currency purchases. The tax would primarily be levied on the purchase of foreign currency by both natural and legal persons for the purposes of savings, travel expense payments, and payments for services rendered by non-residents. Certain foreign currency purchases would be specifically exempt, including in relation to payments for medicines and medical services. The tax is intended to apply for a period of five years, with the intermediary involved in the currency purchase or payment responsible for collecting and remitting the tax due.