Law bill of palliative and relevant fiscal measures
Tax Law department report | Law bill of palliative and relevant fiscal measures
On Wednesday, April 17th, the National Executive Power submitted to the National Congress a law bill titled ‘Law of Palliative and Relevant Fiscal Measures’ (‘Fiscal Package’).
The proposed fiscal reforms have been reduced compared to those included in the original version of the Basis Law, prior to the removal of most tax aspects in the Chamber of Deputies. Among the removed points are regulations concerning export duties and reforms to Excise Taxes on tobacco. On the other hand, the proposed Fiscal Package included reforms to the Income Tax on fourth category incomes, which had previously been included in a separate bill.
Among the proposed reforms in the Fiscal Package are the following:
– Regularization Regime for Tax, Customs, and Social Security Obligations (moratorium)
The “Regime for the Regularization of Tax, Customs, and Social Security Obligations” is created for debts overdue as of March 31, 2024, and for offenses committed until that date related or unrelated to those obligations.
Adherence may be made from the date of entry into force of the regulations issued by the tax authority and up to 150 calendar days from that date.
Instalment plans are provided with an interest rate set by the National Bank. Adherence to the regime will result in the forgiveness of a percentage of the compensatory and punitive interests accrued for late payment from 70% to 20% depending on the moment in which it is formalized. Likewise, fines and penalties imposed will be forgiven.
Fines and other penalties corresponding to substantial obligations accrued until March 31, 2024, inclusive, will be automatically forgiven, provided they are not final and the main obligation has been canceled by that date. The entirety of the compensatory and/or punitive interests corresponding to fiscal obligations (including ordinary and/or extraordinary advances or down payments) canceled prior to March 31, 2024, inclusive, will be automatically forgiven.
The total cancellation of the debt under the conditions provided in this regime—either in cash or through a payment plan—will result in the extinction of criminal action, provided that there is no final ruling at the cancellation date. Criminal action will also be automatically extinguished regarding those obligations that have been canceled prior to the effective date of the regime, provided that there is no final ruling on that date.
– Asset Regularization Regime (tax amnesty)
The “Asset Regularization Regime” is included, which can be adhered to until April 30, 2025, with the possibility of extending it until July 31, 2025. Subjects may regularize assets that were owned by them or were in their possession, custody, or control as of December 31, 2023, inclusive.
Subjects adhering to the regime must pay a Special Tax in US dollars whose applicable rate on assets to be externalized will be 0% when they are less than USD 100,000. Once that value is exceeded, a progressive rate of 5%, 10%, and 15% will apply depending on the time of adherence.
For cash money regularized and deposited and/or transferred to a Special Asset Regularization Account, the Special Tax shall not be paid as long as the funds remain deposited in that account until December 31, 2025. During the period in which the funds are deposited in the Special Asset Regularization Account, they may be invested exclusively in the financial instruments indicated by the regulations. Similar treatment will be given to the proceeds from the sale of regularized securities if transferred to a special account.
Those who adhere will be released from any civil action and tax, exchange, customs, and administrative offenses that may correspond due to non-compliance with obligations related to or originating from the assets, credits, and holdings declared in the regime.
– Personal Assets Tax
The following modifications are established to the Personal Assets Tax Law as from 2023 period:
• Increase in the non-taxable minimum to ARS100,000,000;
• Increase in the untaxed value of housing properties to ARS 350,000,000;
• The tax rates for assets located in the country and abroad are unified, with progressively decreasing rates from 2023 to 2027. The maximum rate for 2023 is 1.5%; for 2024, 1.25%; for 2025, 1%; for 2026, 0.75%; and for the year 2027, 0.25%.
The project also contemplates the possibility of voluntarily paying the tax determined for the fiscal periods 2023 to 2027 in advance through the Special Regime for the Payment of the Personal Property Tax-REIBP. To determine the tax to be paid, the taxable base of the assets as of December 31, 2023, should be used, deducting the corresponding non-taxable minimum, and multiplying the result by 5 and applying a rate of 0.45%.
Those who adhere to the REIBP will enjoy fiscal stability until 2038 regarding the Personal Property Tax and any national tax on assets, not being able to increase their tax burden for property taxes (whatever their denomination) beyond the limits in the project.
Affected parties may adhere to the REIBP until July 31, 2024, inclusive, with an extension until September 30.
– Abolishment of the Tax on the Transfer of Real Estate by Individuals and Successions
The tax – applicable only to the sale of properties acquired before January 1, 2018 – is abolished with immediate effect.
– Income Tax
The fiscal package includes the modification of the income tax, with the abolishment of the recent cedular tax on higher incomes and the reintroduction of the Income Tax for subjects obtaining fourth-category income, under the title of “Personal Income Tax.”
The reform includes the elimination of exemptions and deductions, such as, among others, exemptions for SAC, difference in value of overtime and hours worked on holidays, non-working days, and weekends, productivity bonus, cash shortages, and guards, and the elimination of deductions related to mobility and per diems, and increases in deductions for disadvantaged areas.
The reform establishes the non-taxable minimum at $1,800,000 for single taxpayers without children. The values of personal deductions for all cases are updated.
A new table with a progressive tax rate is also established, ranging from 5% to 35%.
The amounts of deductions and scales will be updated annually – and not quarterly, as in previous versions of the project – from 2025, through the application of the IPC corresponding to the month of October of the previous year. The norm authorizes the Executive Power to increase the amounts during the period 2024.
The project provides that the retroactive collection of the tax will not be charged for those subjects whose income does not exceed the non-taxable minimum set in September 2023 in 180 annual minimum vital and mobile salaries.
– Simplified Regime for Small Taxpayers
Among other modifications, the amounts of the categories applicable from January 1, 2024, are increased.
– Fiscal Transparency
Procedural rules aimed at promoting greater transparency regarding the effective tax burden on products and services are established, among which the breakdown of taxes on invoices and price lists stand out.
– Tax withholdings on electronic payments to small taxpayers
The entities managing debit, credit, purchase, and similar cards, aggregators, aggregators, and other electronic payment processors, as well as financial institutions, may only withhold taxes on payments made through managed, processed, or operated systems when so required by competent national, provided that the amounts they process exceed the equivalent of 10,000 Units of Purchasing Value per month per taxpayer. The Ministry of Economy may establish mechanisms to identify billing thresholds or affected parties provided they adhere to criteria of uniformity. The Provinces and the City of Buenos Aires are invited to adhere to this measure.
Please do not hesitate to contact us should you require any further information on this matter.
Sincerely,
Santiago Montezanti
Enrique López Rivarola