Global Tax Alert (News from Americas Tax Center) | 11 October 2017
Argentine Executive Power proposes tax reform
On 15 September 2017, the Argentine Executive Power proposed, to the House of Representatives, a tax reform bill named the “Tax Revaluation,” which would establish a voluntary revaluation of certain assets of Argentine residents, for both tax and accounting purposes.
Once approved by the House of Representatives, the Senate must approve the bill. Once approved by the Senate, the bill must be signed by the Executive Power and published in the Official Gazette in order to enter into force.
The proposed bill would allow Argentine-resident individuals and companies to opt to revaluate for tax purposes their assets located in Argentina that generate taxable income. The revaluation may be performed in the fiscal period that ends after the law’s entry into force.
Under the proposed bill, the new tax value of the assets would be either: (1) the value determined by an independent appraiser; or (2) the value determined by applying the “revaluation factor,” as established in the bill, to the tax value originally determined in each year or period of the asset’s acquisition or construction.
In addition, the proposed bill would levy a special tax on the difference between the value of all revaluated assets and the determined tax value, at the close of the last fiscal period ended after the law enters into force. The applicable rate would vary depending on the assets revaluated:
- Real estate (regarded as capital assets): 8%
- Real estate (regarded as inventories): 15%
- Shares, quotes and other participations in companies: 5%
- All other assets (except inventories and cars, which may not be revaluated): 10%
The proposed bill also would require taxpayers that opt for the special revaluation regime to withdraw from any judicial or administrative process in which they are claiming, for tax purposes, an adjustment for inflation and to desist from making a new claim.
The proposed bill would allow entities required to prepare financial statements to revaluate for accounting purposes only the asset values recorded in their financial statements, under rules to be established by the tax authorities.
Lastly, the proposed bill would re-establish the adjustment for inflation in the Income Tax Law for investments carried out beginning on 1 January 2018, and thereafter. Under the proposed bill, the inflation adjustment would apply when the variation of the Internal Wholesale Price Index (in Spanish, Indice de Precios Internos al por Mayor or IPIM) supplied by the National Institute of Statistics and Censuses (in Spanish, Instituto Nacional de Estadística y Censos or INDEC), is higher than 100% for the 36-month period before the end of the fiscal period.
Companies carrying on business activities in Argentina through local subsidiaries or establishments should monitor the progress of this bill.
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 4318 1737
- Gustavo Scravaglieri
+54 11 4510 2224
- Ariel Becher
+54 11 4318 1686
- Pablo Baroffio
+54 11 4510 2271
- Darío Corrente
+54 11 4318 1787
- Juan Manuel Iglesias
+54 11 4318 1600
Ernst & Young LLP, Latin American Business Center, New York
- Pablo Wejcman
+1 212 773 5129
- Ana Mingramm
+1 212 773 9190
- Enrique Perez Grovas
+1 212 773 1594
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
- Jose Padilla
+44 20 7760 9253
EYG no. 05808-171Gbl