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14.5. Interest and Penalties

In accordance with the rules of the Tax Procedural Law (‘TPL’), fines depend on the taxpayers’ behavior vis-à-vis the fulfillment of their tax obligations. Absent a fraudulent behavior, the omission or underpayment of taxes due to negligent conduct is penalized by fines ranging from one-half to 100% of the amount of the unpaid tax. Fines for negligent conduct may be waived if the taxpayer demonstrates that it incurred in de facto or excusable legal error while assessing its tax liability.

Fraudulent conduct (intentional misbehavior or concealment) is subject to much higher fines, ranging from twice to ten times the amount of the unpaid tax. According to TPL, tax fraud is to be presumed, inter alia, in the following cases:

  • A grave contradiction between a taxpayer's accounting books and records and the tax returns filed with the tax authorities;
  • Inaccuracies in a taxpayer's books and records that may affect the taxpayer's tax liability assessment; or
  • Discrepancies between the legal structures utilized and the actual economic substance of the transactions to which the taxpayer is a party, with a direct impact on the taxpayer's tax liability assessment.

Pursuant to TPL rules, fines for negligent underpayment or omission of taxes, as well as tax fraud, are reduced to one-third of their minimum amount in the event that the taxpayer accepts the tax adjustments and amends its tax returns before AFIP-DGI initiates the formal tax assessment procedure (determinación de oficio), e.g., if and when the taxpayer consents to the prevista.

These fines are reduced to two-thirds of their minimum amount when the taxpayer consents to tax authorities' adjustments within the 15-day period following the date in which the formal tax assessment process' initiation is notified to the taxpayer.

Finally, fines are imposed at their minimum amount if the taxpayer consents to the tax authorities' assessment contained in the resolution deciding the formal tax assessment procedure. Fine reductions referred to in this and the two preceding paragraphs are only available for first-time offenders.

On 7 February 2019, Argentina introduced new late payment interest rates based on the National Bank Rates. The new interest rates are effective from 1 April 2019 and replaced earlier rules providing for compensatory interest at the rate of 3% per month and punitive interest at the rate of 4% per month in certain cases. The new monthly interest rates will be set quarterly, based on the annual nominal rate of 180-day fixed-term deposits in pesos of the National Bank of Argentina (Banco de la Nación Argentina) as in force on the 20th of the month immediately prior to the beginning of the relevant quarter. The interest rates are set as below:

  • 1.2 times the monthly equivalent of the National Bank rate in case of compensatory interest; and
  • 1.5 times the monthly equivalent of the National Bank rate in case of punitive interest.

If the tax debts are denominated in USD, the rates for the compensatory and punitive charges are set at 0.83% and 1% monthly, respectively (effective 1 August 2019).

The new monthly interest rates will be published at the beginning of each calendar quarter on the website of the Federal Administration of Public Revenue of Argentina.

The new monthly interest rates will be published at the beginning of each calendar quarter on the website of the Federal Administration of Public Revenue of Argentina.

The interest rate for late payment of taxes for the first quarter of the year 2021 is 3.35%. Interest will start accruing on the day after the due date for filing the tax return.

COVID-19 Emergency Measures

Tax Regularization Scheme

Effective 1 January 2020, a tax regularization regime has been introduced for certain Small and Medium Enterprises (SMEs). In response to the COVID-19 pandemic, the tax regularization scheme is extended, effective 26 August 2020, to all types of taxpayers, including cooperatives, non-profit entities, and companies undergoing bankruptcy procedures (except taxpayers convicted of tax fraud).  The scheme grants relief from interest, fines, and penalties on taxes, including federal taxes, social security contributions, and customs duties due up to 31 August 2021  (extended from 31 July 2020). Further, the tax authorities may not initiate criminal proceedings in respect of tax liabilities that fall under the criminal tax law if taxes are paid under this regime.

The regime provides that taxpayers can settle their tax obligations in up to a maximum of 36 to 120 monthly installments depending on the type of taxpayer and the tax obligation. However, the installments are subject to interest at rates ranging from 1.5% up to 3 % per month depending on the type of taxpayer, for installments due up to 31 August 2021, followed by a variable BADLAR rate in pesos from the installment due in September 2021. The new payment plan pursuant to the extension of regularization scheme is as follows:

  • Number of instalments:
    • up to 120 instalments for micro and small companies, non-profit entities and community organizations;
    • up to 60 instalments for medium companies; and
    • up to 36 instalments for other taxpayers:
  • Interest rate:
    • 1.5% per month for the first 12 instalments for micro and small companies, non-profit entities and community organizations, and natural persons, after which the BADLAR rate used by private banks will apply;
    • 2.0% per month for the first 6 instalments by medium companies, after which the BADLAR rate will apply; and
    • 3.0% per month for the first 6 instalments by other taxpayers, after which the BADLAR rate will apply.

Small taxpayers are permitted to pay the taxes owed as a result of a tax audit in instalments.

Applications must be made by 15 December 2020 (extended from 30 November 2020) with the first installment due by 16 January 2021 (extended from 16 December 2020), with subsequent installments due by the 16th of each month to benefit from the regime.

It is further provided that where legal entities hold offshore financial assets, they must repatriate a cash equivalent to at least 30% of the value of the offshore financial assets held as of 26 August 2020. The said amount must be repatriated in pesos (local currency) or kept in a USD bank account for at least 24 months from 26 August 2020.

Further, in order to benefit from the regime, taxpayers must submit a sworn statement by 17 February 2021 on the following information:

  • Partners, shareholders, and/or similar with holdings of at least 30% in the capital stock and/or similar as of 26 August 2020; and
  • Total amount of offshore financial assets held as of 26 August 2020.

Also, apart from SMEs, non-profit entities, and certain others, taxpayers seeking to take advantage of the scheme are subject to certain restrictions for a period of 24 months effective from 26 August 2020, such as:

  • They may not distribute dividends or profits to shareholders;
  • They may not make certain payments to related parties, including payments for technical assistance, engineering, or consulting services, royalty payments, or interest payments; and
  • They may not transfer financial assets abroad or acquire foreign financial assets.