On December 27, 2012 was published in the Official Gazette of the Government of the City of Buenos Aires Law4469 (the “Law”) which amends the current Tax Code (the “Code”).
One of the first amendments introduced by the Law, in order to notify taxpayers of relevant resolutions and for them to comply with their obligations, refers to the implementation of an electronic tax domicile. Registration of the tax domicile implies that all notices, communications and sites done using that domicile will be valid.
As for the powers of the Ministry of Finance, the Law provides that it may grant discounts for early payments under the following conditions:
– For the assessments on the property located in the City ofBuenos Aires, the Law applies a discount rate which shall not exceed twenty percent (20%) annual for early payment.
– For assessments on vehicles in general, the Law applies a discount rate which shall not exceed twelve percent (12%) annual for early payment.
– For those taxpayers who declare their Tax Identification Code (“CUIT”) in their registrable assets and adhere to automatic debit, the Law applies a discount of up to five percent (5%).
The Law sets that the deductions stated may not exceed, together, twenty percent (20%) of the corresponding tax liability.
GROSS INCOME TAX
Another modification incorporated by the Law refers to those exempted to pay gross income taxes, which are as follows:
– The incomes of the first sale of properties intended for single-family and/or multifamily higher category “c” determined in accordance with the specifications and descriptions of the Code.
– The incomes for services rendered to the Government of the City of Buenos Aires(“GCBA”) adjudicated by a bidding process and whose specifications are approved by the Legislature of the City ofBuenos Aires.
– The income obtained by the Integral Health Association, from the collection of the services provided to people with social or private coverage, by the Network of Public Health effectors dependent from GCBA.
Regarding real property leases for tourism, the Law incorporates Article 215 bis to the Code and orders that taxpayers who perform this activity must register in the Register that will create the Government Administration of Public Revenue (“AGIP”). When taxpayers do not comply with the provisions of Article 215 bis, it will be assumed that the property was located throughout the non prescribed period weekly value offered or one with similar characteristics.
In terms of share owners, the Law mandates that when a taxpayer had manorial ownership and/or beneficial ownership of four or more properties, it will be presumed from the fourth property inclusive a value computable over which they must pay taxes, regardless of its occupation or use. The Law mandates that the tax base can never be less than twenty percent (20%) of the homogeneous tax valuation established for the estate taxes.
One of the first modifications introduced by the Law regarding Stamp Tax is related to the lease. When the transfer of ownership of real estate or registrable personal property happens as a result of a lease, the tax base will consist of the total value awarded to the asset, its assessed value or its property value reference (VIR).*
On the other hand, if the transfer of real estate or personal property held on the occasion of making contributions to the formation of companies, capital gain, absorption, merger or reorganization division thereof, the Stamp Tax must be paid on the agreed price, the assesses value or the VIR. It will be paid whichever is grater, in the timing of the implementation of the act or contract by which the transfer is perfected domain. As for the dissolution or liquidation of companies, the tax must be paid only if there is transfer of ownership of real estate, joining the reference value as a new property tax base.
Another change incorporated by the Law refers to the taxable value expressed in foreign currency. The Law provides that in such cases the tax must be paid on the Argentinean currency equivalent at the exchange rate set by the National Bank seller in Argentina (“National Bank”) effective on the business day preceding the date of the act, contract or instrument. It eliminates the option which abilitates the parties to choose the exchange rate for conversion and now they must obey the one indicated by the National Bank.
Regarding the incorporation of companies and non-profit civil entities duly registered: the Law extends the exemption to all acts related to the reduction of capital, the subscription of shares and units of ownership of corporate interest and integration of irrevocable contributions of future capital increases and acceptance.
Finally, the Law dictates that taxpayers who comply with any payment plan, once issued the appropriate executive title, must pay a membership fee which may not exceed three percent (3%) of the total amount of debt to regularize.
The Law came into force on January 1, 2013.
* VIR: It’s the result of a technical work which considers the ground reference value as the valuation of the neighbourhood or area and the valuation of the buildings for their constructive destinations, features and materials, and the build ability potential depending on the surface.