Global Tax Alert | 7 March 2013

Argentina-Uruguay Exchange of Information Agreement enters into force; contains clauses to avoid double taxation

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The agreement between Argentina and Uruguay to exchange information on tax and criminal matters and eliminate double taxation entered into force on 7 February 2013.

Both countries originally signed the Agreement between Argentina and Uruguay for the Exchange of Tax Information and Method to Avoid Double Taxation (the Agreement) on 23 April 2012. On 8 January 2013, the two governments satisfied the notification requirements for the agreement to enter into force. The Argentine government published the entry into force of the Agreement in the Official Gazette on 5 February 2013.

As stated, its main purpose is the exchange of information on tax and criminal matters. In addition, there is a mechanism to avoid double taxation between both countries. In the case of Argentina, the Agreement applies to income tax, tax on personal assets and minimum presumed income tax. To eliminate double taxation, the Agreement allows a resident of a country who has income subject to tax in the other country, to credit the tax paid in the other country. The credit is limited to the tax paid on such income by the taxpayer in its country of residency (calculated before the computation of the credit). Similar provisions exist in relation to taxes on assets.

Moreover, the Agreement establishes a particular rule for those cases in which a resident from one country is paid by a resident of the other country for technical, scientific, administrative or similar assistance. In these cases, the taxpayer can credit the tax paid in the other jurisdiction, regardless of where the income is actually sourced.

The Agreement allows tax authorities to request relevant information for the determination, implementation, monitoring and collection of taxes, the recovery and enforcement of tax claims, or the investigation and prosecution of tax matters. However, the Agreement does not allow purely speculative consultations (i.e., fishing expeditions). Hence, one country must have actual suspicions regarding the taxpayer's situation to demand information from the other.

For criminal matters, the Agreement is effective 7 February 2013. For all other matters, the Agreement is effective 7 February 2013, but applicable to fiscal periods initiated during or after such date. When there is no fiscal period, the Agreement applies to the collection of taxes after 7 February 2013.

For additional information with respect to this Alert, please contact the following:

Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires
  • Carlos Casanovas
    +54 11 4510 2270
  • Gustavo Scravaglieri
    +54 11 4510 2270
  • Ariel Becher
    +54 11 4510 2270
  • Pablo Baroffio
    +54 11 4510 2270
  • Florencia Fernandez
    +54 11 4510 2270
EY Uruguay, Montevideo
  • Martha Roca
    +598 2 902 31 47
  • Rodrigo Barrios
    +598 2 902 31 47
Ernst & Young LLP, Latin American Business Center, New York
  • Alfredo Alvarez
    +1 212 773 5936
  • Pablo Wejcman
    +1 212 773 5129

EYG no. CM3251