Problems relating to Trade and Investment on Argentina

14. Taxation Systems
Issue	Issue details	Requests	Reference

(1) Unexecuted Tax Treaty (for Avoidance of Double Taxation)

- Income tax of 35% is payable, due to the unexecuted tax treaty (for avoidance of double taxation) between Japan and Argentina.

- http://unctad.org/
Sections/dite_pcbb/docs/
dtt_Argentina.PDF

(2) Frequently Amended and Nebulous Taxation System	- Enterprises in Argentina are unable to operate their business with a long-term perspective as GOA keeps changing taxation system frequently, for example, the export surtax rates on agricultural products, or introducing export tax on minerals. Its policy is affected occasionally by the National government finance situation.	- It is requested that GOA ensures transparency in introducing new taxation system, or changing the taxation system or tax rates by ensuring opportunities for private enterprises to receive in advance sufficient and adequate explanation, - It is requested that GOA studies the portfolio for the source of tax revenue, such as new introduction of tax incentive measures for enterprises with clean record of income tax payments, and new establishment of personal inheritance tax.
	(Action) - In December 2007, Federal Agency of Mining decided to apply the Mining Products Export Tax of 5% to 10% to mines opening their operation in 2002 or earlier. Plural mining enterprises have instituted legal proceedings alleging the illegality of this decision. - In January 2012, in order to suppress import of luxury cars, GOA has reduced the minimum taxable amount for motor vehicles and motorbikes (from 212,500 pesos or more to 150,000 pesos or more for motor vehicles, and from 25,000 pesos or more to 22,000 pesos or more for motorbikes), in effect, collecting heavier taxes. - In April 2012, President Fernandez announced that the bill that enables GOA to acquire 51% of the shares in YPF, a subsidiary of a Spanish oil enterprise would be submitted to the Congress. - In January, Administracion Federal de Ingresos Publicos (AFIP) enacted additional rules concerning electronic transactions, compelling the Notification Requirements upon the Argentine residents, purchasing products from foreign suppliers by Postal Service or Private Services. - In January 2014, GOA raised Excise Tax on certain Automotive Vehicles, Motorcycles, Ships, Aircrafts, and Helicopters.

(3) Abrupt High Luxury Tax Levy	- GOA has abruptly adopted the high rate luxury tax starting January 2014. The Luxury Tax of 50% applies to 2-Wheeled Vehicles which local wholesale price is more than 22,001 pesos Local Wholesale Price (compared to the previous 10%). - Starting January 2014, the extremely high Luxury Tax has abruptly been applied to 4-Wheel Vehicles. It directly affects the sales of 4-Wheel Vehicles in high price ranges.	- It is requested that GOA review the Luxury Tax. - It is requested that GOA repeals the Luxury Tax, or reviews the tax rate	- Boletin Oficial (Official Gazette) of 30 December 2013, Law No.26,929, Applicable to all vehicles on which invoice is issued to wholesalers after this date.
	(Improvement) - On 6 January 2016, President Mauricio Marcri promulgated Decree No. 11/2016 in Federal Register, reducing commodity tax rates on some of the domestically manufactured / imported certain cars, motorcycles, steamships, air crafts, and helicopters (applicable during 1 January 2016-30 June 2016). Commodity tax rate on motorcycles less than ARS 6,500 pretax purchase price is tax free, while 10% applies to those in excess of ARS 6,500.

(4) Unrefunded VAT on Service Export

- While VAT levied is refundable on the domestically procured goods and services in providing service export, in fact, the VAT refund scheme does not function so that on the profit and loss statement, the cost increases to the extent of the unrefunded VAT, which heavily burdens the cash flow.

- It is requested that GOA normalises the VAT refund scheme.

<<BACK