Corporate Tax 2010 - BMR Advisors

Negri & Teijeiro Abogados
Argentina
the branch’s net income in dealings with its head-office or other
related entities. However, if the local branch’s accounting records
are inadequate or do not accurately reflect net income of the branch,
the tax agency may treat the branch and the foreign head office
(including its other branches or subsidiaries, if any) as a single
economic unit, and determine taxable income of the local branch as
a portion of the unit’s aggregate income, at its own discretion.
There is no “force of attraction” rule under Argentine income tax law.
Therefore, income attributable to the foreign head office for works,
services or other activities carried out directly by the foreign head
office without intervention by the local branch would not be taxable at
the latter’s level. Such income is subject to the withholding tax at
source provided for in the case of non-residents generally.
6.4 Would such a branch be subject to a branch profits tax (or
other tax limited to branches of non-resident companies)
Local branches of non-resident companies are subject to the
ordinary 35% corporate income tax rate on their worldwide income.
There is not branch profit tax or similar tax.
6.5 Would a branch benefit from tax treaty provisions, or some
of them
Local branches of foreign entities are deemed Argentine residents
under the Argentine income tax law. Therefore, they are entitled to
the benefits of the tax treaties signed by Argentina.
7 Anti-avoidance
7.1 How does Argentina address the issue of preventing tax
avoidance For example, is there a general anti-avoidance
rule or a disclosure rule imposing a requirement to
disclose avoidance schemes in advance of the company’s
tax return being submitted
There is a general anti-avoidance rule in Argentine law called the
“economic reality” principle. It is a statutory rule that based on broad
standards requires individual application and interpretation.
This rule is utilised to assess facts and recharacterise transactions
when the legal structure used by the taxpayer is manifestly
inappropriate to reach the parties’ economic intent. In order to
proceed with the recharacterisation an apparent contradiction between
the legal form and economic substance of the transaction is required.
Should that be the case, the substance of the transaction prevails, while
its legal form is discarded.
Other special anti-avoidance rules are contemplated under Argentine
legislation. As an example, anti-deferral rules provide that Argentine
taxpayers who derive passive income from blacklisted jurisdictions
shall include their pro rata share of such passive income on a current
basis, rather than when dividends are actually distributed.
No disclosure of avoidance schemes is provided under Argentine
legislation.
Argentina
6.6 Would any withholding tax or other tax be imposed as the
result of a remittance of profits by the branch
As explained above in question 6.4, local branches are subject to the
ordinary 35% corporate income tax on their worldwide income. To
the extent accounting profits do not exceed taxable profits at the
branch’s level, no additional tax would apply on the remittance of
funds to the head office. Otherwise, a 35% equalisation tax would
apply on the excess (see question 3.1 above).
ICLG TO: CORPORATE TAX 2010
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