On May 7 2013 the Executive Branch sent to the National Congress a bill that provides for a New Voluntary Disclosure Program (“New Voluntary Disclosure Program”) and the creation of three new financial instruments designed to funnel the assets disclosed under the New Voluntary Disclosure Program. We believe the initiative is positive.
1. Voluntary Disclosure Program.
We will develop firstly the New Voluntary Disclosure Program and we will then describe the instruments to be created in the proposed bill sent to the National Congress.
It is noteworthy that recently in March 2013 the Argentine Tax Authorities have launched a voluntary disclosure program for regularization of tax debts, customs and social security resources aiming at producing “counter-cyclic measures for the structural development of companies, job growth, maintain the sources of jobs and strengthen the acquisition power of Argentine citizens, and with those tools, consolidate supply and the argentine domestic market” (see our newsletter). The main advantage of the program of March 2013 vis-à-vis the permanent disclosure program –established in March 2010- is the amount of installments allowed by it– 120 monthly installments- and the reduction of the financing interests, which incentives financing through this system.
The New Voluntary Disclosure Program provides for the possibility to disclose any holding of foreign currency as of April 30, 2013 in Argentina or overseas, only during a three month period as of the enactment of the bill that approves the New Voluntary Disclosure Program. Taxpayers applying to the New Voluntary Disclosure Program New Voluntary Disclosure Program will not be subject to any tax whatsoever, provided that such taxpayers subscribe the financial instruments defined below. Moreover, those taxpayers willing to apply to the New Voluntary Disclosure Program should be current as of May 31 2013 with their filings on income tax, minimum presumed income tax, and personal assets tax in regards fiscal year ended on December 31st 2012. The differences applicable because of the application of the New Voluntary Disclosure Program shall be declared in the tax affidavits for fiscal year 2013. For tax purposes the amount of foreign currency shall be determined at the bid price of the Banco de la Nación Argentina applicable on the day the deposit of the funds pertaining to the application to the New Voluntary Disclosure Program.
The following taxpayers are excluded from the New Voluntary Disclosure Program: (i) those declared bankrupt, (ii) those criminally claimed by the tax authorities with criminal conviction not subject to appeal prior to the entry into force of the New Voluntary Disclosure Program; (iii) those criminally claimed for common crimes related to the non compliance of tax obligations with criminal conviction not subject to appeal prior to the entry into force of the New Voluntary Disclosure Program; (iv) accused of money laundering, and (v) politically exposed persons. Finally, it is noteworthy that the Executive Branch will be authorized to extend any of the terms included in the project.
2. Creation of New Financial Instruments.
As mentioned above, in order to be able to apply to the New Voluntary Disclosure Program it is necessary to subscribe any of the following financial instruments defined in the proposed bill:
1) The Argentine Savings Bond for Economic Development (“BAADE”). This BAADE will be registered or bearer with a 4% interest rate and due on 2016.
2) The Promissory Note for the Economic Developments (“PADE”), and the
3) Certificate of Deposit for Investment (“CEDIN”).
The BAADE and the PADE will be issued by the Executive Branch and the CEDIN by the Central Bank, and they will all be denominated in US Dollars. The CEDN will be requested before any financial entity that shall remit the funds to the Central Bank. These instruments will be cancelled in the same currency as they were issued evidence of investment in a real estate asset.
This project is being analyzed by the National Congress and is likely to be passed into law soon.