New program for regularization of tax debts, customs and social security resources

On March 2013 the Argentine Tax Authorities have launched a new voluntary disclosure program for regularization of tax debts, customs and social security resources (the “New Voluntary Disclosure Program”) 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”.

The main advantage of the New Voluntary Disclosure Program vis-à-vis the permanent disclosure program –established in March 2010- is the amount of installments allowed by the New Voluntary Disclosure Program – 120 monthly installments- and the reduction of the financing interests, which incentives financing through the New Voluntary Disclosure Program, due to the current high inflation rates in Argentina (between 25 and 30 per cent per year).

As explained the maximum term is 120 monthly installments equal or larger than AR$ 150 (one hundred and fifty pesos). The installments shall be monthly, equal and consecutive due the 16th day of each month. The applicable rate is 1.35% per month and there are no specific or particular other rates.

The New Voluntary Disclosure Program applies to taxes, social security charges and fines and customs charges, and its fines and interests that were due as of and including February 28, 2013. In addition, tax debt that was being restructured under another program can be restructured under the New Voluntary Disclosure Program because of it more attractive terms (term and interests rates).

However, the New Voluntary Disclosure Program specifically excludes sums due for taxes on non-registered payments, sums due that were originated under tax inspections, withheld taxes and perceptions, down payments, health insurance contributions, labor insurance contributions, contributions to the registry of workers and employers, taxes on cigarettes, income and minimum presumed income pertaining to fiscal years of companies or individuals as of October 1 2012, tax on personal assets for fiscal periods after 2011, VAT for import of services, and certain custom charges for declaring the holding or acquisition of agricultural goods, among others. Subjective exclusions include media companies, individuals with criminal tax, customs charges.

Application to the New Voluntary Disclosure Program is possible until July 31, 2013 and it is a very simple procedure to do trough the website of the Argentine Tax Authorities.

The New Voluntary Disclosure Program does not provide –as the previous voluntary disclosure program implemented in Argentina in 2009 through law No. 26,476- a waiver of fines or interests (the “Former Program”). This Former Program, also called “Anti-crisis Plan”, was to allow companies and individuals to regularize their situation, and to promote the inversion and capital repatriation.

This Former Program provided for a large moratorium. Obligations under the scope of this Former Program included those in administrative or judicial litigation, provided that the defendant unconditionally acquiesced, and if necessary, ceased and renounce to any right or action, even of repetition, assuming the payment of costs. The Law also suspended the term for the criminal actions.

The Former Program provided for a scaled reduction of interest depending on the date the adhesion to the program. If the adhesion was performed in the first or second month following the rule of the Law, the reduction was of a 70%, in the third or fourth month, 60%, and in the fifth or sixth month, 50%.

Many Argentine taxpayers applied to the Former Program, and it is expected that many also apply before July 2013 to the New Voluntary Disclosure Program.

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