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Regulation of the last amendment of the income tax law
The Decree of the Executive Branch No. 2,334/2013, which modifies the Regulatory Decree of the Income Tax Law (RDITL), was recently published in the Official Gazette. Taxand Argentina discusses the key measures introduced by the Decree.
The new Decree rules the amendments to the Income Tax Law (ITL) introduced by Law No. 26,893. Among other relevant matters, the Decree No. 2,334/2013 has the following effects:
- The term “other securities” contained in the ITL and in the RDITL shall be understood as referred to securities issued or gathered in series and subject of being listed in stock exchange markets
- Clarifies that the gross income arising from the transfer of shares, quotas, equity participation bonds and other securities shall be determined, as the case may be, according to article 61 of the ITL (ie, deducting the restated cost from the transfer price)
- For purposes of the new tax on dividend distributions, the moment of payment of dividends or income distributions shall be the same which already ruled for purposes of the Equalisation Tax (ET) (the moment in which said concepts are paid or made available etc)
- Clarifies that the income arising from the transfer of shares, quotas, equity participation bonds -including quotas of mutual funds- and other securities would be taxed at a 13.5% effective tax rate over the gross amount of the payment or, in its case, at a 15% tax rate over the net income arisen from the transaction, without prejudice of the quality of the foreign subject which may obtain such income. Therefore the new decree clarifies that foreign individuals are not subject to a higher tax rate than the one which applies to foreign companies
- Clarifies that in those cases in which ET shall apply, the taxable base of the new tax on dividend distributions shall be the amount resulting from deducting the withheld ET to the amount distributed in cash or in kind, except for distributions made in shares of the distributing company or quotas. The Decree No. 2,334/2013 further rules that the new tax on dividend distributions shall be withheld together with the ET
- Clarifies matters related to the use of loss carry forwards, to the treatment of stock redemptions and to the valuation of distributions in kind
Also published in Thomson Reuters' Taxnet Pro, 24 February 2014
Certain doubts introduced by Law No. 26,893 still remain. One important example is the tax on capital gains for cases in which the transaction is closed between non-resident taxpayers, Law No. 26,893 states that the acquirer would be liable for the payment of the tax, although the payment mechanism and the eventual liability of the local representative of the non-resident taxpayer that is liable for the payment of the tax are not clear. Multinationals should investigate Decree 2,334/2013 further to ensure they are aware of all the developments being introduced, and which measures, as per the example above, are still unclear.