Tax Information Exchange Agreements (TIEAs) provide for the exchange of information on tax matters, and Argentina has concluded TIEAs with 24 countries, including Andorra, Aruba, Azerbaijan, The Bahamas, Bermuda, Brazil, Cayman Islands, Chile, China, Costa Rica, Curaçao, Ecuador, Guernsey, India, Isle of Man, Italy, Jersey, Macedonia, Monaco, Peru, San Marino, South Africa, Spain, and Uruguay.
Argentina has agreed to exchange tax rulings with eligible jurisdictions from 1 April 2016 in implementation of BEPS Action 5. A specific ruling can be exchanged with a relevant jurisdiction if it is international in nature and affects the relevant jurisdiction. The exchange is possible if there is an agreement between Argentina and the relevant jurisdiction providing for the spontaneous exchange of tax information. The agreement can be a tax information exchange agreement (TIEA), a tax treaty, or the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Exchange is also required for “historical” rulings granted between:
- 1 January 2014 and 31 March 2016; and
- 1 January 2010 and 31 December 2013, provided they were still in effect as on 1 January 2014.
Argentina acceded to the OECD Mutual Assistance Convention as amended and the convention entered into force for Argentina on 1 January 2013. Effective September 2017, Argentina has signed the Common Reporting Standard (CRS) Multilateral Competent Authority Agreement and adopted measures to implement the automatic exchange of financial account information in accordance with the global standard for exchange of information developed by the OECD under the CRS.
Argentina has introduced a mandatory tax planning disclosure regime (Régimen de Información de Planificaciones Fiscale - IPF Regime) via General Resolution 4838 of 19 October 2020. Under the regime, taxpayers are required to disclose their use of certain tax planning strategies.
The IPF Regime covers national tax planning, international tax planning, and other tax planning of a similar nature. National tax planning includes any agreement, scheme, plan, and any other action that is carried out in Argentina in relation to any national tax and/or information regime provided such actions result in a tax advantage or any other type of benefits in favor of the taxpayer.
Similarly, international tax planning includes any agreement, scheme, plan, and any other action that involve Argentina and one or more foreign jurisdictions, provided such actions result in a tax advantage or any other type of benefits in favor of the taxpayer. The covered types of tax planning are listed in the IPF microsite of the tax authority website.
For the purposes of the regime, a tax advantage or any other type of benefits refers to any decrease in the taxation of a taxpayer and/or related parties. Non-declaration by taxpayers under an information regime is also considered a tax advantage.
The reporting obligation applies to taxpayers that participate in the tax planning covered by the regime, and also to tax advisers involved in the implementation of tax planning, either directly or through third parties. Further, tax advisers are responsible for complying with the regime when other associated/connected tax advisers are involved in the implementation of tax planning covered by the regime, regardless of the jurisdiction where such other advisers are based, incorporated, or domiciled. However, taxpayers or tax advisors are not obligated to report tax planning covered under Art. 3 and 4(f) of General Resolution 4838 (national planning and specified international planning in the IPF microsite) until defined on the online portal for IPF regime.
The deadlines for reporting depend on the nature of tax planning:
- National tax planning must be reported by the last day of the month following the close of the fiscal period in which the tax planning was implemented; and
- International tax planning must be reported within ten days of implementation.
For this purpose, the implementation of tax planning begins from the moment management starts with the reportable action.
Information on prior tax planning implemented between 1 January 2019 and the date the General Resolution was published, i.e., 20 October 2020, must also be reported by 29 January 2021 on the online portal for IPF Regime. The details regarding the online portal for IPF are yet to be published.
Failure to comply with the regime will impact the taxpayer's ability to make certain requests with the tax authority, including requests for tax credit certificates and certificates of tax and social security status. In addition, non-compliance will increase tax audit risk. Further, non-compliance will also result in a standard fine of up to ARS 10,000 for non-compliant companies, which may be increased with an additional fine ranging from ARS 500 to ARS 45,000.
Argentina has several specific anti-avoidance rules for transactions with entities located in non-cooperative jurisdictions, such as:
- Restriction on the deductibility of expenses incurred by resident entities in respect of transactions with entities located in tax havens (see Sec. 6.1.);
- Higher withholding tax on interest paid to foreign institutions established in tax havens (see Sec. 8.2.2.);
- Higher withholding tax on certain capital gains arising from the transfer of shares and other securities, bonds, etc., where beneficiaries located in / funds arising from tax havens (see Sec. 8.2.2.);
- Transfer pricing rules for dealings between domestic entities and foreign-related entities located in tax havens (see Sec. 13.4.1.);
- Limitations on foreign source net losses originated in tax havens (see Sec.7.);
- Anti-deferral rules for domestic shareholders having equity participation in tax-haven entities deriving passive income (see Sec. 13.3.); and
- Disallowance of the indirect foreign tax credit for domestic shareholders with equity participation in a tax-haven company (see Sec. 9.).
In order to make these rules applicable, the regulations incorporated a list identifying non-cooperative jurisdictions. Although not expressly stated in the Income Tax Law or the regulations, the basic characteristics of such jurisdictions provided by the OECD were taken into account in drawing up the list (i.e., no or low effective tax rates, ring-fencing of regimes, lack of transparency, lack of effective exchange of information). The regulations stated that a jurisdiction included in the list could be removed at a later date if it signed an information exchange agreement with Argentina or amended its domestic tax legislation to eliminate its characterization as a tax haven.
In 2013, Argentina amended the regulations to provide that for the purposes of the Income Tax Law and the applicable regulations, all references to the "jurisdictions with low or no taxation and preferential regimes" are considered as references to "non-cooperative countries for purposes of fiscal transparency." The regulations further state that "cooperative countries for purposes of fiscal transparency"are those countries, territories, jurisdictions or special regimes that sign with the government, an exchange of information agreement or a double tax agreement that contains a wide exchange of information clause to the extent that the exchange of information is effective. Countries may also qualify where they initiate negotiations to enter into one of the previously mentioned agreements. In addition, to the extent possible, these agreements shall follow the standards adopted by the Global Forum on Transparency and Exchange of Information.
'Preferential regime' means any specific regulation or scheme that deviates from the general regime of corporate income tax in force in a jurisdiction and results in an effective rate lower than that established in the general regime.
Effective 1 January 2018, new rules have been introduced for the determination of non-cooperative or low tax or zero tax jurisdictions, which include the following:
- Jurisdictions that do not have a tax information exchange agreement or tax treaty with Argentina;
- Non-cooperative jurisdictions, i.e., jurisdictions that do not effectively exchange information; and
- Low or no-tax jurisdictions, including jurisdictions with an effective tax rate below 60% of the Argentine rate (based on 25% corporate income tax rate applicable from 2020).
Effective 9 December 2019, Argentina issued a list of 95 “non-cooperative jurisdictions”, as follows:
|Afghanistan||Congo (DRC)||Kenya||North Korea||Syria|
|Ascension Island||Egypt||Laos||Papua New Guinea||Togo|
|Bangladesh||Equatorial Guinea||Lesotho||Paraguay||Trinidad and Tobago|
|Belarus||Eritrea||Liberia||Philippines||Tristan da Cunha|
|Benin||Ethiopia||Libya||Pitcairn Islands (Pitcairn, Henderson, Ducie, and Oeno Islands)||Tuvalu|
|Bhutan||Micronesia||Madagascar||Congo (Rep. of)||Tonga|
|Bosnia and Herzegovina||Gabon||Maldives||Saint Helena Island||Uzbekistan|
|Botswana||Gambia||Mali||Sao Tome and Principe||Vatican City|
|Brechou (Channel Islands)||Guinea||Mauretania||Sark Island||Vietnam|
|Burkina Faso||Guinea-Bissau||Mongolia||Sierra Leone||Yemen|
|Cape Verde||Jordan||Myanmar||South Sudan|
|Central African Republic||Honduras||Namibia||Sri Lanka|
|Cuba||Ivory Coast||Niger||Swaziland (Eswatini)|
Argentina has introduced beneficial ownership reporting requirements on 15 April 2020 vide a General Resolution (4697/2020) subsequently updated by General Resolution (4878/2020) of 12 December 2020.
The reporting requirements apply to resident entities, civil associations, foundations, and mutual funds. The beneficial ownership information is required to be reported as on 31 December of each year with respect to the "final beneficiary" of each of their shareholders (or equivalents), related entities, other ownership structures, and foreign participants.
For this purpose, the concept of final (ultimate) beneficiary includes:
- A natural person who owns the capital or voting rights of a company, legal person, or other contractual entity or legal structure (reporting entity), regardless of the number of shares or equivalent securities they own and their nominal value, or that, by any other means, exercises control directly or indirectly over said reporting entity;
- If the natural person defined as the final beneficiary above is not identified, the president, managing partner, administrator, or highest authority of the reporting entity must be reported as the final beneficiary, without prejudice to the powers of the tax administration to investigate the causes that led to the breach of the obligation to identify the final beneficiary as above;
- In cases where a reporting entity's shares are listed on a public stock exchange, only natural persons holding at least 2% of the shares or holding shares valued at ARS 50 million or more on 31 December of the reporting year need to be reported as final beneficiaries; and
- Mutual funds are required to report final beneficiaries according to the preceding conditions, regardless of their shares being listed on a stock exchange.
If the final beneficiary is not the direct shareholder (or equivalent) of the reporting entity, the reporting entity must maintain all the documents showing the various levels of ownership up to the "final beneficiary". The reporting entity must identify all entities in the ownership structure.
The beneficial ownership information is required to be reported to the tax authorities annually within specified due dates (see below).
Resident entities and individuals are required to report information pertaining to foreign entities where they hold participation of more than 50%, where the passive income of the foreign company is greater than 50% of the gross income for the year. The condition for ownership may be met individually or together with related parties. Further, the reporting requirements are applicable regardless of the participation percentage, subject to meeting the following requirements:
- Right to dispose of the company’s assets under any title;
- Right to appoint or remove a majority of directors, etc.; and
- Right over the entity’s benefits.
Resident individuals are also required to report any participation in the capital of resident or non-resident legal entities or structures and performance of executive positions.
The information relating to beneficial ownership and foreign passive income entities is required to be reported to the tax authorities on an annual basis between 28 and 30 July, depending on the last digit of the tax ID code. However, an initial reporting deadline is between 28 and 30 October 2020, depending on the last digit of the tax ID code. Information required to be reported by the deadline includes information pertaining to 2019, and with respect to foreign passive income entities, information for 2016, 2017, and 2018. The initial reporting deadline that was previously set as 29 January 2021 is further extended to different prescribed dates based on the number of participations and/or final beneficiaries as given below:
- For the declaration of up to 50 subjects, the deadline is 19 February 2021;
- For the declaration of more than 50 up to 500 subjects, the deadline is 5 March 2021; and
- For the declaration of more than 500 subjects, the deadline is 19 March 2021.
Resident taxpayers are required to report the sale or acquisition of shares, quotas, and other rights in resident or non-resident entities within 10 working days from the date of the transaction. The reporting obligation is also applicable to public notaries involved in such transactions. Further, entities resident in Argentina are also required to report any changes in top executives and board members within 10 working days of the change.
Other special anti-avoidance rules include an anti- source-avoidance rule on derivative transactions, on technical, financial, or similar advice rendered from abroad, reassessment of branch income on a single economic unit basis, intercompany cross-border dealing standards, readjustments, and time matching rules of income/expenses on foreign-owned domestic entities, recapture tax on exemptions to foreign persons, limitation on the deduction of payments made abroad under patent or trademark licensing agreements and technical assistance agreements, and characterization rules on cross-border leasing transactions.