BEPS – TRANSFER PRICING

Argentina is a member of the Inclusive Framework on BEPS under which it must collaborate on the implementation of the OECD/G20 BEPS Package.

On June 21, 2018, the OECD released two reports containing guidance for Tax Authorities on the approach to hard-to-value intangibles (Action 8) and the application of the transactional profit split method (Action 10):

• The approach to hard-to-value intangibles protects tax authorities from the negative effects of information asymmetry by ensuring that tax administrations can consider ex post outcomes as presumptive evidence about the appropriateness of the ex ante pricing arrangements. This guidance has been formally incorporated into the Transfer Pricing Guidelines.
• The new guidance for application of the transactional profit split method will be incorporated into the Transfer Pricing Guidelines, replacing the previous text. It expands the guidance on how and when the method should be applied.

CARBON DIOXIDE AND LIQUID FUELS TAX

On December 29, 2017 Law 27,430 introduced a comprehensive reform to the Argentine tax system (the “Tax Reform”). It amended the Liquid Fuels Tax, creating a new Carbon Dioxide Tax and replacing the tax base calculation for a fix amount tax updated according to the Consumer Price Index instead of ad valorem taxes.

Decree 501/2018 regulates the Carbon Dioxide and Liquid Fuels Tax:

• If the taxed good includes biofuels, that amount should be excluded from the tax base.
• The tax must be yearly updated in January, April, July and October.
• Mining or fishing producers and service providers could request up to 45% of the amounts paid for the Liquid Fuels Tax on gas oil purchases as an Income Tax credit.

Decree 501/2018 was published in the Official Gazette on June 1, 2018 and entered into force on June 2, 2018.

CIGARETTES – EXCISE TAXES

Excise Tax is a federal tax imposed on the sale of particular luxury products, such as cigarettes and certain beverages.

The Tax Reform establishes a minimum Excise Tax applicable to cigarettes -a fixed amount- which must be quarterly updated according to the Consumer Price Index.

Decree 506/2018 establishes that the update must be yearly performed in January, April, July and October. The updated amount will be effective as from the first day of the second month following such update.

Decree 506/2018 was published in the Official Gazette on June 5, 2018 and entered into force on June 6, 2018.

TDF PROMOTIONAL FRAMEWORK

Law 19,640 sets a Promotional Framework for the province of Tierra del Fuego under which taxpayers who manufacture products in Tierra del Fuego could be eligible for federal tax exemptions, such as the Value Added Tax and the Income Tax.

Resolution 47/2018 allows local manufactures to include supplies originated outside the Special Customs Area, provided that local supplies are essential for the final product. Please note that the added value arising from the local manufacture of such products must be more than 50% of the value of the product.  Therefore, Resolution 47/2018 increases the number of local producers who will access the Promotional Framework.

Resolution 47/2018, published in the Official Gazette on June 6, 2018, entered into force on June 7, 2018.

SALTA – PROMOTIONAL FRAMEWORK

With the purpose of promoting the generation of employment, the province of Salta has enacted Law 8,086 establishing a promotional framework for private investments in the province, benefits for small and medium sized companies (“PYMES”, in Spanish) and promoting the local purchase of goods and services.

• Promotional framework for private investments: Those investments made in certain areas (e.g., renewable energies, mining, hydrocarbons, software) could enjoy tax credits and provincial tax exemptions for up to 5 years. The taxpayer must submit an investment plan, and the Ministry of Production will determine the benefits to be granted.
• PYMES incorporated in the Province of Salta will have fiscal stability from January 1, 2018 to December 31, 2027.
• Local Purchases: The Provincial Executive Branch will establish the measures to promote local purchases, which may include tax withholding exemptions.

Law 8,086 entered into force on June 27, 2018.