Corporate Tax 2010 - BMR Advisors

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Slaughter and May UK Corporation Tax On Dividends Graham Airs Slaughter and May One Bunhill Row London, EC1Y 8YY United Kingdom Tel: +44 20 7090 5050 Fax: +44 20 7090 5000 Email: graham.airs@slaughterandmay.com URL: www.slaughterandmay.com Graham Airs first joined Slaughter and May in 1976 and became a partner in the Tax Department in 1987. His practice as a partner in the Tax Department covers all direct taxes and value added tax, but in particular corporate tax. He has extensive experience of mergers, acquisitions and disposals, privatisations, securitisations, corporate finance and structured finance. He is a member of the Law Society’s Tax Law Committee and of its International Tax sub-committee. Slaughter and May is a leading international law firm with a worldwide corporate, commercial and financing practice. We provide our clients with: a professional service of the highest calibre, combining technical excellence with commercial awareness and a practical, constructive approach to legal issues; access to the best legal advice worldwide through our seamless working relationships with leading lawyers from independent law firms; a client-focused service giving proactive advice; and a multi-specialist approach which enables our lawyers to advise on a broad range of their client’s needs rather than bringing in many different specialists who may be unknown to the client. Our tax group is involved both in structuring transactions and in advising on the documentation to implement transactions. We have particular expertise in: mergers and acquisitions, flotations and privatisations, demutualisations, company reorganisations, private equity, investment funds, investigations and disputes, banking and capital markets, structured finance, asset finance and leasing, securitisations and transfer pricing. “The firm continues to perform outstandingly across the board.” (Legal Business Awards, 2009) ICLG TO: CORPORATE TAX 2010 © Published and reproduced with kind permission by Global Legal Group Ltd, London WWW.ICLG.CO.UK 5
Chapter 2 Argentina Guillermo O. Teijeiro Negri & Teijeiro Abogados Ana Lucía Ferreyra 1 General: Treaties 1.4 Do they generally incorporate anti-treaty shopping rules (or “limitation of benefits” articles) 6 1.1 How many income tax treaties are currently in force in Argentina Compared with the tax treaty network of OECD countries, Latam countries’ network, although rapidly expanding, is still rather limited. Argentina, currently a party to only 17 tax treaties in force, provides a representative example. Argentina has treaties in force with Australia, Bolivia, Brazil, Belgium, Canada, Chile, Denmark, Germany, Finland, France, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom. In 2007, the Argentine Congress ratified a tax treaty concluded with Russia, but this treaty is still undergoing the exchange of ratification instrument stage prior to its entry into force. As from January 1, 2009, the tax treaty concluded with Austria is no longer in force, after its denunciation by the Argentine government in June 2008. 1.2 Do they generally follow the OECD or another model Most treaties currently in force are patterned after the OECD Model Convention (OECD MC), with changes more or less following the U.N. Model, depending on Argentina’s bargaining position at the time of negotiation and signing. Exceptions are the tax treaties entered into with Bolivia and Chile, which are structured along the lines of the model tax treaty approved by Decision 40 of the Andean Group, and the treaty with Brazil, which, although following the formal structure of the OECD MC, has certain unique provisions. 1.3 Do treaties have to be incorporated into domestic law before they take effect Under the Argentine legal system, the power to conclude tax treaties lies on the Executive Branch; however, treaties need to be ratified by Congress. Thus, they become laws only upon congressional approval. The congressional ratification must be notified to the other contracting country and the treaty enters into effect as from the date provided therein. Consistent with the provision contained in Section 25 of the Vienna Convention, to which Argentina is a party, Argentine law authorises the Executive Branch to decide the provisional application of signed treaties before the actual effective date. So far, however, the Executive Branch has made use of this prerogative in only one case (the existing treaty with Switzerland). Besides the OECD MC’s general beneficial ownership rules included in a number of treaties, Argentine tax treaties do not specifically address treaty-shopping. They are similarly silent on the use of domestic anti-avoidance rules in a treaty context. The only conditions to treaty benefits are those stated in a domestic resolution holding that persons benefiting from withholding tax reduction in Argentina under the provisions of a tax treaty must submit an affidavit to the local withholding agent to prove entitlement. The affidavit must include the name and tax address of the beneficiary, the origin of the income and a declaration that it has no permanent establishment in Argentina. Additionally, the beneficiary must furnish an affidavit issued by the home country tax authorities confirming its resident status for purposes of the relevant treaty as well as the correctness of claimant’s statement about the absence of permanent establishment in the country. Nonetheless, certain limitation of benefits clauses exist under some treaties. For instance, the treaty signed with Spain contains an ownership test to condition specific benefits (i.e., tax sparing). Thus, Spanish residents deriving royalties from the transfer of technology or technical assistance to Argentina are deemed subject to a 15% Argentine withholding tax (when, in fact, such withholding tax under the treaty is 10%), as long as the Argentine payor of the royalties neither holds directly or indirectly an equity interest in a third country’s company exceeding 50%, nor is controlled directly or indirectly by a corporate shareholder residing in a third country. The treaties in force with the U.K. and Sweden provide a broad limitation of benefits provision in connection with interest and royalty payments. Thus, the source base tax reduction shall not apply whenever the intention of the parties to the respective loans or license agreements is to take advantage of the treaty benefits. Furthermore, Article 9 of the treaties in force with Canada, Denmark, Finland, Norway, Sweden, Switzerland and the Netherlands state that correlative adjustments otherwise available for the application of transfer pricing rules are not allowed in the cases of fraud, negligence or intentional omission. 1.5 Are treaties overridden by any rules of domestic law (whether existing when the treaty takes effect or introduced subsequently) The Argentine Constitution sets forth the principle that international treaties approved by Congress prevail over domestic laws, so that tax treaties enjoy a well-settled legal status in Argentina. Based on this constitutional provision, a subsequent statute (for instance, a WWW.ICLG.CO.UK ICLG TO: CORPORATE TAX 2010 © Published and reproduced with kind permission by Global Legal Group Ltd, London
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Chapter 19 France Yves Rutschmann B
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Chapter 20 Germany Wolfgang Tischbi
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Chapter 25 Iceland Bjarnfreður Ól
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Chapter 26 Ireland Michael Ryan McC
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McCann FitzGerald Ireland Ireland 3
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