Law No. 27,613: Incentive to Argentine Federal Construction and Access to Housing and Standardization Program to Reactivate Argentine Federal Construction.
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Joint Report of the Tax and Real Estate & Hospitality Departments | Law No. 27,613: Incentive to Argentine Federal Construction and Access to Housing and Standardization Program to Reactivate Argentine Federal Construction
Dear Sirs:
On March 12, 2021, Law No. 27,613 (the “Law”) was published in the Official Gazette. The Law provides for the implementation of an “Incentive Regime for Argentine Federal Construction and Access to Housing” (the “Incentive Regime”), aimed at promoting the development or investment in real estate projects in Argentina, and a “Normalization Program to Reactivate Argentine Federal Construction” (the “Program”).
Incentive Regime
• The real estate projects included in the Incentive Regime cover those new private projects initiated as of March 12, 2021 (such as constructions, enlargements, installations, etc.), and that, pursuant to building codes or similar provisions, are subject to report, authorization or approval by the competent authority. Likewise, the definition of new private projects extends to those projects that as of March 12, 2021, have a percentage of completion lower than 50% of construction termination.
• Investor benefits:
(a) The value of investments in real estate projects carried out until December 31, 2022, is exempted from Personal Assets Tax (the “PAT”) as of the tax period in which the investments is effectively made and until the tax period in which the real estate project is concluded, adjudicated or the right and/or the participation originated as a result of the investment is disaffected, whichever occurs first, and up to a maximum term of 2 tax periods.
(b) The equivalent of 1% of the value of investments in real estate projects may be computed as a payment on account of the PAT, according to the standards established in the Law.
(c) Property or real estate rights owners, shall enjoy the deferral of payment of the Property Transfer Tax (Title VII of Law No. 23,905) or the Income Tax, as applicable, when the corresponding taxable event is configured on the occasion of the transfer and/or alienation made to the subjects mentioned in the Law who develop the real estate projects -under the conditions established in the Law-, which occurred as of March 12, 2021, until December 31, 2022, both dates inclusive.
Tax payment shall proceed at the time or tax period in which the holders: i) receive compensation in national or foreign currency; ii) assign or transfer the participation in any way; iii) the completion of the project occurs, or iv) the unit received as compensation is adjudicated; whichever happens first.
Program
• Human persons, undivided successions and subjects established in Section 53 of the Income Tax Law, residing in Argentina, may voluntarily report to the Federal Administration of Public Revenues, the possession of foreign currency and/or national currency in the country and abroad not declared until March 12, 2021, within a period that will extend as of March 12, 2021, and until the expiration of a 120 calendar days term from said date.
• Funds included in the Program must be deposited in a Special Deposit and Cancellation Account for Argentine Construction (“CECON.Ar”) opened in any of the entities included in Law No. 21,526. Said funds may be temporarily applied to the purchase of national public securities and shall immediately only be affected to the development or investment in real estate projects.
• The value of the holding included in the Program will be subject to the application of a special tax, of which rate shall fluctuate according to the time in which the funds are entered into the CECON.Ar. The tax shall not be deductible nor taken into account of the Income Tax.
• Subjects who enter into the Program will enjoy the following benefits for the amounts declared:
(a) Will not be subject to the provisions of unjustified equity increase (Subsection f of Section 18, Law No. 11,683) with respect to externalized holdings.
(b) Shall be released from all civil, commercial, tax penalties, foreign exchange penalties, customs penalties, and administrative offenses that may correspond.
(c) Shall be exempted from paying national taxes failed to declare, in accordance with the provisions of the Law.
• Subjects who enter the Program must resign the promotion of any judicial or administrative proceedings to claim, for tax purposes, the application of updating procedures of any nature.
Please, do not hesitate to contact us should you require any further information on this matter.
Sincerely,
Pedro Nicholson
Santiago L. Montezanti
Luz Hitters
Luján Callaci