On 28 October 2024, Law 27.780 was enacted approving the AGREEMENT BETWEEN THE REPUBLIC OF ARGENTINA AND THE PEOPLE’S REPUBLIC OF CHINA FOR THE ELIMINATION OF DOUBLE TAXATION WITH RESPECT TO INCOME AND WEALTH TAXES AND THE PREVENTION OF TAX AVOIDANCE AND TAX ELUSION and its PROTOCOL (the “DTT”).
The DTT follows the OECD models.
The main objective of the agreement is to facilitate foreign investment by ensuring that a company operating in Argentina pays income tax only in Argentina and does not also have to pay income tax in China.
The main points of the treaty with China are:
– A company’s profits may only be taxed in the country where it is incorporated, unless it operates in the other country through a permanent establishment.
– Dividends will be subject to withholding tax in the country where the paying entity is resident, with a limit of 10% if the beneficiary is a company owning at least 25% of the capital for one year, or 15% in other cases.
– Interest may be taxed in the country where the payer is resident, with a ceiling of 12%.
– Royalties will be taxed according to the type of use: 3% for use of news, 5% for copyright on literary, artistic or scientific works, 7% for use of containers, and 10% in other cases.
– Profits from the sale of shares or participations will be taxed in the country of residence of the company.
– The assets of a resident of one country located in the other country may be taxed in both countries, except for ships or aircraft.
To avoid double taxation, the treaty provides for a tax credit mechanism for taxes paid abroad.
The provisions will take effect from 1 January 2025.
