• TaxUpdate

Today the Argentine Official Gazette published Law No. 27,742 -“Bases and Starting Point for the Freedom of the Argentine People” (“Bases Law”) and Law No. 27,743 – “Palliative and Relevant Tax Measures” – (“Fiscal Package”).

A. The Bases Law is a comprehensive Act that entails tax and non-tax-related matters, including but not limited to:

1. The declaration of a 1-year administrative, economic, financial, and energetic public emergency.

2. A Large Investments Incentives Regime (RIGI).

3. The comprehensive modernization and amendment of Concessions Law No.17,520.

4. Labor Modernization measures – Amendments to the Labor Contract Law No. 24,013 concerning employment and employee registration, trial periods, rights of employees hired by contractors or intermediaries, maternity leave, severance pay, complaints, etc.

5. Amendments to the Administrative Procedures Law No.19,549.

6. Amendments to the Hydrocarbons Legal Regime – Law No. 17,319, to the Natural Gas Regime – Law No. 24,076.

7. Amendments to Public Employment Law No. 25,164.

8. Empowerment of the Executive Branch to elaborate, with the agreement of the Argentine Provinces, a harmonized environmental legislation with the main objective of applying the environmental management international best practices concerning the exploration, exploitation, and/or transportation of hydrocarbons aiming at carrying out such activity with adequate environmental care.

9. Public Companies subjection to Privatization and Administrative Reorganization concerning the comprehensive State Reform.

B. The Fiscal Package Law includes several tax measures and amendments, from which we highlight the following:

1. Repeal of the Tax on the Real Estate Transfers Made by Individuals and Undivided Estates/Successions of Title VII of Law No. 23,905, as amended.

2. A new Tax, Customs, and Social Security Obligations Regularization Planforthose due by March 31st, 2024, inclusively.

3. A new assets Disclosure and Regularization Regimeaimed at encouraging Argentine residents to disclose, report, and regularize assets held in Argentina and abroad – available until July 31st, 2025.

4. Amendments to the Individual Income Tax (i) The Cedular Tax on Higher Income from Dependent Labor, Pensions and Privilege Pensions (“Cedular Tax”) is repealed, (ii) Individual and Undivided Estates/Successions Income Tax’s scales were increased/updated; (iii) Individual Income Tax deductions amounts also were updated; (iv) some exemptions were repealed (extra-hours plus, productivity bonus, supplementary annual salary (“SAC”), commuting/mobility expenses); (v) the “Fourth Category” regime applicable to employment income is reinstated, with certain modifications.

5. Amendments to the Wealth Tax (Personal Asset Tax): (i) The non-taxable minimum threshold is increased to AR $ 100,000,000, and AR $ 350,000,000; (ii) For FY 2023 new rates ranging from 0.5% – 1.5% were established and which shall be gradually reduced in the following tax periods until reaching a rate of 0.25% in the FY 2027; (iii) a special payment regime is created for individuals and undivided estates that are Argentine tax residents by December 31st, 2023 – the “REIBP” – which allows them to prepay the Personal Assets Tax concerning FY 2023 – 2027 – in a unified way – in exchange for a lower tax rate – 0.45 or 0.5% per year.

6. Measures of Tax Transparency for Consumers: Amendments to the VAT Law were introduced to require that as of January 1st, 2025, when a registered taxpayer makes sales, leases, or provides taxable services to final consumers, the VAT applicable to the transaction must be stated in the invoice or equivalent document. Further, if a taxpayer sells goods or services to consumers, they must separate the sales tax from the final price. Also, they provide the consumer with a receipt that shows the breakdown of the total price, including VAT. Also, when publishing the price of the relevant product or service, those who perform sales, leases, or provision of services to final consumers must indicate the final amount to be paid by the final consumer as well as the net amount excluding VAT and other national indirect taxes affecting prices, which must be accompanied by the legend “PRICE WITHOUT TAXES”.

7. Small Taxpayers Simplified Regime Scale, Amounts, and Parameters were updated.

8. Increase of Mining Royalties for Certain Projects: The maximum royalty that provinces can charge is increased to 5% (former 3%) of the pithead value of the mineral extracted.