Argentina: Tax benefits for disclosing currency in Argentina and abroad and deferral of inflation adjustment in income tax

In brief

On 1 December 2022, Law No. 27,701 of the Federal Budget ("Law") was published in the Official Gazette, as well as Decree 799/2022 enacting it. The Law contemplates, among others, the following tax benefits:

  • Disclosure of foreign and/or domestic currency in the country and abroad for the purchase of used real estate in Argentina for a value equal to or less than ARS 60 million intended for (i) habitation of the person that declares the funds and their family; or (ii) rental for a minimum term of 10 years for habitation of the tenant and their family
  • Creation of the 'Argentine Investment and Production Incentive Regime' for the disclosure of foreign currency in the country and abroad for the payment of imports for consumption, including services for productive processes
  • Deferral in thirds of the adjustment for inflation in income tax in the first and second fiscal years starting from 1 January 2022, inclusive, to the extent that an investment equal to or higher than ARS 30 billion is made during each of the two fiscal periods immediately following the allocation of the first third

In depth

On 1 December 2022, the Law was published in the Official Gazette, as well as Decree 799/2022 enacting it. The Law contemplates, among others, the following tax benefits:

Disclosure of foreign and/or domestic currency in Argentina and abroad for the purchase of used real estate in Argentina

Individuals, undivided estates and the companies listed in Section 53 of the Income Tax Law (Section 53 includes all companies that pay income tax in the third category residing in the Argentine Republic) may voluntarily declare the holding of foreign and/or domestic currency in the country and abroad. This is within a term that will be extended from 22 August until the expiration of 360 calendar days from such date, inclusive, to the extent that the funds are for the purchase of used real estate in Argentina for a value equal to or less than ARS 60 million (this amount arises from the current text of the second paragraph of Section 24 of the Personal Assets Tax Law), and as long as they are for the (i) habitation of the person declaring the funds and their family; or (ii) rent for a minimum term of 10 years for habitation of the tenant and their family. 

For these purposes, the special tax to obtain the benefits of the disclosure will be determined on the basis of the date of entry of the holding declared in a special account, according to the following rates:

a) Funds deposited from 22 August and until the term of 90 days running from such date, both dates inclusive: 5%
b) Funds deposited from the day following the expiration of the term of item a) and up to the expiration of 90 calendar days, both dates inclusive: 10%
c) Funds deposited from the day after the expiration of the term of paragraph b) and up to the expiration of 180 calendar days, both dates inclusive: 20%

Argentine Investment and Production Incentive Regime 

The 'Argentine Investment and Production Incentive Regime' is created so that individuals, undivided estates and the companies listed in Section 53 of the Income Tax Law (Section 53 of the Income Tax Law includes all companies that pay income tax in the third category) residing in Argentina may voluntarily declare the holding of foreign currency in the country and abroad, within a term that will be extended from the effective date of this regime and until the expiration of 360 calendar days from that moment (inclusive). 

The holding of foreign currency in the country and abroad that is deemed as foreign under the terms of this regime is that which had not been declared as of the date of its entry into force, under the terms of Section 8 of Law No. 27,613 (Disclosure of Money Destined to the Construction of Real Estates in Argentina).

The funds included in the voluntary declaration of foreign currency must be deposited in a Special Deposit and Cancellation Account for Argentine Investment and Production (CEPRO.Ar), in any of the entities included in the regime of Law No. 21,526, as amended, in the manner and within the terms established by the Federal Administration of Public Revenues (AFIP).

The funds declared must be used only for the payment of imports for consumption, including services for productive processes. The Financial Economic Capacity System established by the AFIP is not applicable in these cases and such agency must implement a specific scheme of Integral System of Monitoring of Imports (SIMI).

In this case, the special tax to obtain the benefits contained in the regime will be determined on the value of the holding declared, expressed in local currency at the time of entry into the special account, according to the following rates:
a) Funds deposited from the effective date of this regime and up to the expiration of 90 calendar days from said effective date, both dates inclusive: 5%
b) Funds deposited from the day following the expiration of the term of item a) and up to the expiration of 90 calendar days, both dates inclusive: 10%
c) Funds deposited from the day after the expiration of the term of paragraph b) and up to the expiration of 180 calendar days, both dates inclusive: 20%

Deferral in thirds of the inflation adjustment in the income tax for the first and second fiscal years beginning on or after 1 January 2022

Regarding the inflation adjustments of the Income Tax Law, the following amendments are included:
Taxpayers that, by application of the inflation adjustment rules, determine a positive inflation adjustment in the first and second fiscal years from 1 January 2022 (inclusive) may allocate one-third in that fiscal period and the remaining two-thirds (in equal parts) in the two immediately following fiscal periods.

The allocation of the positive inflation adjustment, in the terms set forth in the preceding paragraph, will only be applicable to taxpayers whose investment in the purchase, construction, manufacture, processing or definitive importation of used goods — except automobiles — during each of the two tax periods immediately following the computation of the first third of the period in question is higher or equal to ARS 30 billion. Failure to comply with this requirement determines the loss of the benefit.
 

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