Corporate Tax 2010 - BMR Advisors

Negri & Teijeiro Abogados
Argentina
Argentina
4.7 What other national taxes (excluding those dealt with in
“Transaction Taxes”, above) are there - e.g. property taxes,
etc.
Argentina levies a minimum presumed income tax (“MPIT”) on
Argentine corporations (e.g., an Argentine subsidiary of a foreign
corporation) and non-residents that maintain a permanent
establishment in Argentina (e.g., a branch). The MPIT is levied on
the taxpayer’s total assets (with certain exceptions) at a rate of 1%,
to the extent the value of total assets within Argentina (inventories
included) exceeds AR$200,000 (approximately US$67,000). If
assets do not exceed this threshold amount, no MPIT is payable.
The corporate income tax paid by the Argentine taxpayer may be
credited against its MPIT liability. If the taxpayer’s MPIT liability
is greater than its corporate income tax liability, the taxpayer is
required to pay the excess MPIT. This tax may be carried over and
credited against the taxpayer’s income tax liabilities arising in
future years for a maximum 10-year period.
In addition, foreign entities and individuals owning stock in an
Argentine corporation are subject to a personal assets tax at a rate
of 0.5% on the proportional net-worth value (valor patrimonial
proporcional) of their stock participation. The tax is assessed and
collected by the Argentine issuing corporation.
5.3 Is there a participation exemption
Although Argentina does not have a participation exemption regime,
dividends from Argentine companies are generally non-taxable in
Argentina (see question 3.1 above). This treatment applies to local
and foreign shareholders regardless of the level of their equity
participation in the distributing entity. In addition, foreign entities and
individuals are not taxed on capital gains realised from the sale of
stock in Argentine corporations (see question 5.1 above). The
exemption is not available to corporate resident taxpayers.
5.4 Is there any special relief for reinvestment
A special reinvestment relief system is provided for depreciable assets
(roll-over transactions). Whenever a depreciable asset is sold and
replaced, income derived from the sale transaction may be assigned to
the new asset’s tax cost, resulting therefore in a deferral in the
recognition of built-in gains. General depreciation rules provided in
the income tax law would then be applied on the cost of the new asset
reduced by the assigned income amount. This option is available to
the extent both transactions are performed within a one-year-term.
6 Branch or Subsidiary
4.8 Are there any local taxes not dealt with in answers to
other questions
A tax on real property (real property tax) is also imposed by each of
the provinces. Applicable real property tax rates vary depending on
the taxing jurisdiction.
5 Capital Gains
5.1 Is there a special set of rules for taxing capital gains and
losses
6.1 What taxes (e.g. capital duty) would be imposed upon the
formation of a subsidiary
The subsidiary’s deed of incorporation or articles of incorporation
may be subject to stamp tax depending on the taxing jurisdiction
where the subsidiary is incorporated. No other taxes are imposed
upon the formation of a subsidiary.
6.2 Are there any other significant taxes or fees that would be
incurred by a locally formed subsidiary but not by a
branch of a non-resident company
10
There is no special rule for capital gains in Argentina. Gains from
the sale or exchange of real estate and other capital assets are taxed
at the ordinary corporate income tax rate (35%).
Notwithstanding the above, it is worth mentioning that capital gains
from the sale of stock in Argentine corporations, as well as public
securities and corporate bonds, are exempt from tax in Argentina
(unless realised by an Argentine corporate taxpayer).
Corporate taxpayers are not allowed to offset operating income with
losses arising from the disposition of certain securities or derivative
instruments. Such losses may only be applied against income from
the same type of transactions. Thus, losses arising from the
disposition of shares, quotas or other corporate participations,
including units of common investment funds, may only be offset
against income from the disposition of the same type of assets
obtained in the same year or in the subsequent five years. Likewise,
losses arising from derivative instruments or contracts (except
hedging transactions) may only be offset against income originated
by this type of instrument/contract, within the same year or in the
subsequent five years.
5.2 If so, is the rate of tax imposed upon capital gains
different from the rate imposed upon business profits
See question 5.1 above.
There are no other taxes imposed on local subsidiaries that are not
levied on local branches of foreign entities. Both local branches
and subsidiaries are taxed on a worldwide income basis at the same
applicable rate.
However, certain differences are worth considering. Start-up losses
of an Argentine subsidiary may only be offset against subsequent
profits over a five-year period. In the case of local branches, startup
losses may be also offset against the head office’s other profits
and other members of the group’s profits under the head office’s
home tax legislation.
Upon disposition of the investment, as a general rule, foreign
shareholders are not taxed on the capital gains deriving from the
sale of their participation in the Argentine corporation. (See
question 5.1.) Conversely, a foreign head office having a branch in
Argentina may only dispose of its investment by selling the assets
of the branch. Income deriving from the transaction would be taxed
at the ordinary 35% corporate income tax rate.
6.3 How would the taxable profits of a local branch be
determined
Taxable income of local branches is determined on the basis of
separate accounting and following the same rules concerning
taxable income, exclusions, and allowable deductions as those
applied to domestic taxable entities. Transfer pricing rules
following the arm’s length standard are applied in order to assess
WWW.ICLG.CO.UK
ICLG TO: CORPORATE TAX 2010
© Published and reproduced with kind permission by Global Legal Group Ltd, London