The Private Wealth & Private Client Review, Sixth Edition – ARGENTINA
THE PRIVATE WEALTH & PRIVATE CLIENT REVIEW, SIXTH EDITION – CHAPTER 6 by Miguel María Silveyra, Valeria Kemerer and Enrique López Rivarola.
INTRODUCTION
Argentina is home to many wealthy individuals and families. Only a small group of these have received sophisticated technical advice in matters of tax planning and estate succession. Consequently there is an importatn group of wealthy people, mainly concentrated in the interior provinces of the country, lacking an adequate tax, financial and succession plan for their estates.
TAX
Income tax is a national tax applied on the worldwide income obtained by individuals and legal entities domiciled in Argentina and Argentine branches of foreign entities. Foreign resident individuals are taxed only on their Argentinean income sourse through a withholdind system and based on their presumed income.
Domestic individuals are taxed upon a sliding scale ranging from 5 per cent to 35 per cent depending on the income subjet to taxation. Foreign individuals are taxed at a flat 35 per cent rate. The scale of shares, equity interests, bonds and other similar securities are subjet to a 15 per cent rate, for both domestic and foreign individuals.
In the case of foreign or domestic individuals, income (trading or interest) derived from securities and shares that are listed in Argentina is generally exempt from income tax.
However, pursuant to Income Tax Regulatory Decree 1344/1998, securities listed in foreign markets would not be exempted in the case of domestic individuals. This is controversial given that income tax expressly exempts capital gains derived from the sale of shares, equity interest and securities that are either listed in stock markets or authorised to be publicly offered. The scope of this exemption was controversially limited by the tax´s regulatory decree to securities traded though markets regulated by the Argentine National Securities Commission (CNV). Given that in Argentina, the principle of legalty (no taxtation without representation) is stablished in the constitution and taht it is also applicable to exemptions, this limitation could be constitutuonally challenged because it was not created by a law.
Specifically, the sale of shares is exempt from income tax if they are listed in stock markets authorised by the CNV (according to the regulatory decree), solely in the case of domestic individuals. Foreign individuals cannot claim this exemption.
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