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Russia - Argentina Double Tax Treaty Enters Into Force

Argentina
A new Double Taxation Treaty has recently entered into force between Argentina and Russia. Taxand Argentina explores the details of this tax treaty and the impact it may have on businesses operating globally.

On 1 November, 2012 the Official Gazette published a notice that the Convention subscribed between Russia and Argentina for the Avoidance of Double Taxation with Respect to Taxes on Income and Capital ("Convention") has entered into force.

The Convention had been approved in Argentina by the Law 26,185 (published in the Official Gazette of 3rd January, 2007) but the entry into force was still pending since Russia had not notified Argentina that the internal procedures necessary for the Convention to enter into force had been complied with.

The Convention was signed as far back as 2001, although domestic taxation and court practice has changed since then. For example, in 2001, non-discrimination rules in a DTT meant that thin capitalisation rules could not be applied. This is no longer the case, and thin-cap rules must be applied with no regard to art.24 of the DTT.

On 15 October 2012, Russia notified Argentina of the compliance of these procedures and, therefore, the Convention entered into force as of 16 October 2012.

The Convention sets forth the following reduced withholding tax rates -among other tax beneficial treatments:

  • Dividends: (i) 10% on the gross amount of the dividends if the beneficial owner is a company which holds directly at least 25% of the capital of the company paying the dividends, and (ii) 15% on the gross amount of the dividends in all other cases
  • 15% in the case of interest
  • 15% in the case of royalties

According to Argentine domestic legislation, to enjoy the benefits contemplated in any tax treaty entered into by Argentina, the foreign investor must fill in a sworn statement which includes, along with other information, a statement issued by the tax authority of the country where the investor is located certifying that the investor is a resident of such country.


Your Taxand contacts for further queries are:
ARGENTINA
Ezequiel Lipovetzky
T. 5288-2950
E. exl@bfmyl.com

Luca Peralta Krogslund
T. 5288-2950
E. lpk@bfmyl.com

RUSSIA
Andrey Tereschenko
T. +7 495 967 00 07
E. a.tereschenko@pgplaw.ru

Ivan Zelenin
T. +7 495 967 00 07
E. i.zelenin@pglaw.ru

Taxand's Take

This tax agreement will be helpful for businesses in both countries, because the annual volume of trade between Russia and Argentina is valued at more than USD 1 billion. The Convention provides additional opportunities for business growth, but multinationals should take note of the altered legislation and court practice when it is applied.

Taxand's Take Author

Andrey Tereschenko