Andrés Edelstein, Ignacio Rodríguez
Regarding the foreign exchange market, the peso depreciated slowly against the US dollar throughout the year until the unification of the exchange market that took place in December, where the official exchange rate jumped 40.1%, from ARS 9.82 to ARS 13.76 per dollar, to converge with the implicit exchange rate in the marginal market. Thus, the price as of December 31 2015 was ARS 12.93, while at November 30 it was ARS 9.66 and on December 31 2014 had been ARS 8.47, with an average of ARS 9.23 for all 2015.
Fiscal balance showed current expenses growth of 38.56% compared to 2014, driven by social security benefits and current transfers to the private sector (explained by subsidies, mainly to energy and transport, which have increased from 0.5% of GDP in 2006 to 4.0% in 2015, half of the total fiscal deficit). Revenues increased 29.3% versus 2014.
The result was a primary deficit of around AR$292 billion (around $ 31.5 billion excluding profits from the Central Bank and Social Security Agency and considering the averaged exchange rate during 2015), 73% higher than 2014, and a fiscal deficit (primary result plus interest payments on debt) of AR$412.5 billion ($ 44.5 billion), 7.1% of GDP.
With regards to foreign trade, Argentina's trade balance reached a deficit of $3.3 billion after 15 consecutive years of surplus. This balance was generated in the context of a reduction in both exports and imports. In the case of exports, the reduction was the result of a 15.59% fall in prices of traded products, plus a decline of 1.51% in the quantities sold, largely affected by lower demand from Brazil, the main trading partner of the country, where exports fell $3.8 billion in the year. Regarding imports, the decline is explained by the fall in prices of traded products, which was 11.76%, since the quantities sold actually rose by 3.79% over 2014.
Industrial production dropped 0.8% in 2015 compared to the previous year, mainly driven by the weaker performance of the automotive sector. As in previous years, in 2015 industrial activity continued to show ups and downs along the different sectors: a third of the sectors, non-metallic minerals, showed a growth greater than 1.5%; another third remained in a range between 1.5% and a fall of 1.5%; while the remaining industries, including the automotive industry and basic metal industries, showed a decrease higher than 1.5%.
In the first semester of 2016, economic activity accumulates a fall of 1.3% compared to the same period of 2015, affected by a deceleration of consumption and downfalls in the industry and construction sector, even though public expenses remain high.
In April 2016 the IMF estimated a decline of 1.0% of GDP in Argentina for 2016 and a rebound in GDP growth of about 2.75% in 2017.
On December 17 2015 the Argentine Central Bank (BCRA) issued Communication A 5850 by which important amendments where introduced to the Exchange Currency Market (MULC) regulations removing some bureaucracy and limitations to the payment of imports of goods and services as well as to the requirements for the formation of foreign assets by Argentine residents, and to the regulations related to financial debts with non-residents.
The Executive Branch also issued Decrees No. 133/2015 and 349/2016, by which export duties for most agricultural and industrial products, and certain mining products, have been repealed. In addition, on December 18 2015, the Ministry of Economy and Public Finance issued Resolution No 3/2015 which introduces a series of amendments to the regulations on the inflows of funds under financial debts of the private sector (no longer required to bring the funds into Argentina) and for inflows of funds from non-residents mainly regarding the timeframe for complying with the permanence requirement for repayment (reduced from 365 to 120 running days) and the repealing of the 30% mandatory reserve (the so-called 'Encaje'). With these measures, the new government normalised the tight exchange control environment that Argentina has been faced with over the past five years.
Moreover, resident individuals and corporations (with certain specific exceptions) and local governments may access the MULC to purchase foreign currency without the prior approval of the BCRA (initially with certain monthly caps but without limits) under the following items: a) real estate investments abroad, b) loans granted to non-residents, c) direct investment contributions abroad by residents, d) investments in foreign portfolios of legal entities, e) purchase to hold foreign currency in Argentina and f) purchase of travellers checks.
Finally, funds deposited by non-residents in Argentine bank accounts (USD denominated) in general can freely be transferred abroad as long as the applicable minimum term of permanence within the country has been observed.
On November 4 2015, a new double tax treaty (DTT) between Argentina and Mexico was signed.
The tax treatment of Argentine transactions under the newly-signed tax treaty with regard to (i) interest, (ii) royalties, (iii) dividends and (iv) capital gains would be as follows:
Some other particular features the treaty provides are as follows:
The tax treaty will enter into force on January 1 2017 following the exchange of instruments of ratification which is expected to occur soon.
The Argentine government enacted Law 27,260 with special incentives for Argentine taxpayers to report previously unreported assets. The Law also includes modifications to various tax provisions.
The amnesty is intended to encourage Argentine businesses and individuals to report foreign and domestic assets not previously reported. To benefit from the amnesty, reporting should occur by March 31 2017.
Assets reported may be subject to a reduced tax rate ranging from 5% to 15% depending on the type of asset, the asset's total value, and whether the reporting is done during 2016 or in the first three months of 2017. A 0% rate may apply if the reported assets are invested in specific Argentine sovereign bonds or local mutual funds that focus on local development projects such as renewable energy or infrastructure.
The Law would also allow taxpayers to settle any unpaid tax liability (including social security contributions and import/export duties) with partial exemption of accrued interest, penalty forgiveness and access to an installment plan.
The Law also contains other significant tax reforms, including:
Finally, it also creates a Parliamentary Commission for analysing and evaluating the tax reform proposals to be sent by the Executive Branch within the next year aimed at reducing the overall tax burden and making its structure simpler and more progressive.
Through the enactment of Law 26,190, as amended by Law 27,191 and Regulatory Decrees 562/2009 and 531/2016, the Argentine government launched and updated promotional measures for the energy sector with the aim of encouraging the use of renewable energy sources for the production of electricity.
According to this regime, certain tax benefits shall be granted upon request by filing the projects with the relevant Authorities, provided they start being executed before or on December 31 2017.
For the execution of infrastructure work, including capital assets, civil work, electromechanical and assembly works, and other related services that are part of the new generation plant or included in the preexistent ones that functionally works together producing energy through renewable sources, the following benefits apply:
Some guarantees have to be offered to enjoy the above tax benefits. Also, from a provincial tax perspective, Law 26,190 invites all Argentine provinces to adhere to the regime enacting local regulations with tax benefits aimed at promoting and encouraging the production of electric energy through renewable sources.
Argentina, like most other Latin American countries, has long been struggling with a fragile and unstable economic climate. However, with a new pro-business government in place, Argentine businesses are hoping the economy will get back on its feet.
Practitioners say that many Argentine taxpayers have lost faith in politicians in general due to corruption and sky-high inflation that has reached 40%. Martín Barreiro, partner at Baker & McKenzie, said that the inflation was the most important issue for corporate clients at the moment, and that Argentine companies would continue to have a problem if the inflation rate was not adjusted.
"The current government has announced that it will try to reduce inflation, but it's very difficult," he said. "Corporate clients are very concerned about inflation simply because we do not have the possibility to adjust the balancing aspect of inflation, so at the end of the day, corporations in Argentina are paying corporate tax on a phantom income," he said.
"The government is working on reconstructing the prices of public services, and this situation will affect consumers. Inflation is a blind tax that you don't see, but you suffer," said Horacio Dinice, partner and head of transfer pricing at Deloitte.
For wealthy families and high net-worth individuals (HNWI), the biggest issue at the moment is the tax amnesty programme announced by the government, which runs until March 31 2017. The tax amnesty will give wealthy families and HNWIs an opportunity to disclose any unreported assets and normalise their situation. To participate, the assets must comply with Argentina's tax regulations and also with the standards of the international market. Through the OECD's automatic exchange of information between countries, which will be put in place between 2017 and 2018, unreported assets in foreign countries may be exposed to the Argentine tax authorities by foreign financial entities.
"It's not only a discussion about how much money they [taxpayers] have to pay in connection with taxes, interests and penalties – they could also be subject to criminal prosecution and they could be considered guilty of tax evasion," said Barreiro. "So the most critical issue for them is the possibility to regularise their unreported assets via the tax amnesty programme.
The government has also made other efforts to stabilise the economy. In an attempt to boost business and attract foreign investors, the new president slashed export taxes on minerals such as gold and silver, and only a couple of commodity taxes remain. Dinice said that Argentina did not have a lot of business because the previous government established a model that was not attractive for foreign investors, but that the new government would make some changes for investors to become interested. "There is a lot of optimism in terms of business, but change isn't that quick," said Dinice. "Most foreign investors are expecting to see what is going to happen over the next year to be sure that the change is serious and that it will lead to economic stability."
Barreiro said that the government recently implemented a tax reform to (i) annul the 1% minimum presumed income tax applicable on the assets of companies, (ii) annul the 10% withholding tax on the distribution of dividends and (iii) grant the possibility to pay tax and certain social security liabilities in instalments, with a reduction of the interest due and with a forgiveness of penalties. "It would be a significant advantage for Argentine companies," said Barreiro.
Deloitte & Co. S.A.
Perón 646, 2nd floor
Ciudad Autónoma de Buenos Aires
Country Tax Leader
Jorge E. Ferro
Tel: +54 11 4320 2722
Tel: +54 11 4320 4020
Tel: +54 11 4321 3010
Horacio D. Dinice
Tel: +54 11 4321 3002
Maria Inés Del Gener
Tel: +54 11 4321 3014
Pistrelli, Henry Martin y Asociados SRL
25 de Mayo 487
C1002ABI Buenos Aires
Tel: +54 11 4318 1600
South America Tax Managing Partner
Tel: +55 11 2573 5032
Country Tax Managing Partner
Tel: +54 11 4318 1619
Business Tax Services
Tel: +54 11 4318 1619
Global Compliance and Reporting
Tel: +54 11 4318 1619
Tel: +54 11 4510 2224
International Tax Services
Tel: +54 11 4510 2224
Tel: +54 11 4515 2651
Tel: +54 11 4510 2224
Arenales 1618 (1061) Bs.As Argentina
GNP Group has been the Argentine Tax firm most nominated and/or awarded at Local and International Level: Euromoney-ITR, World Finance, ACQ, Idea, Apertura, and has experienced the Market highest growth, since foundation – 2006.
GNP Consultores – a GNP Group member firm offer international and local tax solutions, according to the requirements of each industry. We offer a wide range of tax services working close to our clients, understanding their philosophy and transforming consulting and compliance of tax regulations into strategies and business opportunities. High quality and understanding, pursuing and improving our clients needs is our identity.
beyTech – a GNP Group member firm – offer Business Process Outsourcing and Transfer Pricing solutions in close relationship with GNP Consultores' team, in order to maximize tax optimization and quality of service.
CEO and Country Tax Leader
Guillermo N. Pérez
International, Corporate and Indirect Tax
Gastón Fernandez Celi
Jorge Luis Savoia
Outsourcing and Transfer Pricing
Juan Elías Pérez Bay
|Corporate Income Tax||35%||A|
|Capital Gains Tax||15%||35%||B|
|Net Operating Losses (years)|
|Royalties from, for example, patents, know-how||21%||28%||31.5%||D|
A A tax on minimum presumed income is payable to the extent it exceeds regular corporate income tax for the year.
B The 15% rate applies to capital gains derived by foreign residents from sales of shares, quotas, and other participations in entities,
titles, bonds and other securities. Similar treatment is granted to Argentine individuals. Argentine corporate residents are subject to the regular 35% corporate rate.
C The 10% dividend withholding tax is calculated on after-tax dividend distributions. However, if the amount of a dividend distribution or a profit remittance exceeds the after-tax accumulated taxable income of the taxpayer, a separate final withholding tax of 35% may be imposed on the excess, regardless of the application of the general 10% withholding tax, thereby resulting in an effective rate of 41.5%.
D These are final withholding taxes imposed on non-residents only.
Abeledo Gottheil Abogados was established in 1963 and is led by Eduardo Raúl Mujica and Gabriela Inés Buratti. Mujica lectures on various tax issues at different institutions in the country, while Buratti is a professor of tax planning and other tax matters. The firm has experience in advising on local and international tax including investment strategies, corporate structures, reorganisations and other issues.
Allende & Brea is a full-service law firm which advises clients on tax planning and structuring, representation in administrative and judicial appeal proceedings, audits, transfer pricing and reorganisation. Diego Botana is a key contact at the firm. He specialises in general corporate practice, with a focus on commercial law, M&A and cross-border contracts, among other things.
The tax professionals at Asorey & Navarrine are experienced in tax planning, transfer pricing and litigation for international companies. The firm has represented many banks and international financial institutions, oil and gas, and food companies, with a full range of legal services and business counselling. Clients of the firm include Coca Cola, Merrill Lynch Group and Nestlé. Ruben Asorey and Susana Camila Navarrine are founding members and co-heads of the practice.
Martín Barreiro heads the tax practice at Baker & McKenzie. The three partners and 13 other professionals who make up the practice are specialists in tax planning and tax litigation. Barreiro is experienced in general tax planning, international private banking, global tax planning and transfer pricing.
Key recent works include transferring and reorganising a client's local operations in a tax-efficient way, as well as assisting another client with tax planning for a corporate spin-off.
The firm works with clients in the grain export, pharmaceutical, automotive and entertainment industries. Some of the firm's clients are Wal-Mart, Google and Alfred C. Toepfer.
"All attorneys at Baker & McKenzie Argentina are very responsive; their advice is always well documented and timely delivered. Extremely professional, understand our needs and make us feel they are part of our team," a client said.
Bruchou, Fernández Madero & Lombardi, Taxand Argentina is headed by Matías Olivero Vila and has a strong presence in the Argentine tax market. The firm is one of the largest full-service tax practices in the country and has four partners and 21 other tax professionals. It has expertise in all areas of taxes including M&A, cross-border structuring, corporate income tax and provincial and local taxes. Its litigation arm is capable of defending clients at the administrative and judicial levels. Its client list includes large companies in the financial, commodities and agribusiness, energy, oil and gas, mining, technology and services sectors.
The firm is giving corporate tax advice and tax due diligence for the acquisition of Argentine targets of a general insurance company by a Chinese investment group. The firm is also assisting a major bank in a tax litigation case.
Team leader Matias Olivero Vila joined the firm in 1993 and has earned numerous distinctions for his work. Other members of the team include Liban Kusa and Daniela Rey. Kusa specialises in tax and customs matters, while Rey is experienced in tax planning and transactional tax matters.
Bulit Goñi & Tarsitano Abogados y Consultores offers comprehensive tax services, including controversy and disputes work. It has a strong client list of international banks, local industry chambers, pharmaceutical, luxury goods and automotive companies such as JPMorgan, Rolex and Chevron. Partners Enrique Bulit Goñi and Alberto Tarsitano oversee the team.
Led by Fabian Cainzos, the boutique firm Cainzos, Fernández & Premrou has a tax practice that advises clients in the areas of planning, M&A, reorganisation and litigation support.
Deloitte's tax lawyers have experience in all major areas of tax including business tax compliance and reporting services, business tax consulting, tax litigation, research and development, tax management consulting, international tax, M&A, transfer pricing, customs and global trade and expatriate services.
Led by Jorge Ferro, the team of 17 partners and 209 other professionals, serves a range of global and regional multinational companies both public and private, covering several industries, including agriculture, consumer business, manufacturing, technology, media and telecommunications (TMT), oil and gas, infrastructure and financial services.
In February 2016, the firm advised a foreign company in an M&A transaction. The company was selling its interests in an Argentine company, and Deloitte developed different alternatives based on loopholes in the law and the particularities of the transaction.
Estudio Beccar Varela's lawyers have expertise in local and international tax planning, transfer pricing and the taxes affecting the insurance, utility and telecommunications sectors. The firm also has a litigation practice. Santiago Montezanti is a key partner in the firm. "They have very good lawyers, big firm," said a lawyer from a competing firm.
Estudio O'Farrell's tax professionals have experience in different areas of the judicial branch, from the National Tax Court to the Supreme Court of Justice, and specialise in complex tax litigation, local taxation and transfer pricing. The team of four partners and six other professionals consists of not only lawyers, but also accountants.
The firm serves clients in the telecommunications, oil and gas, pharmaceutical, electricity and retail industries. It has long-standing clients such as Ford Argentina, Gas Natural Ban and Pampa Energía.
Miguel Tesón leads the team. Tesón served as president of the Argentine Fiscal Association, the country's main body for tax lawyers and accountants, between 2012 and 2014.
"We have used this firm for over 20 years. Our experience has been excellent," said a client.
EY, known as Pistrelli, Henry Martin y Asociados in Argentina, is led by Carlos Casanovas. The firm employs 320 tax professionals. It provides integrated services in all areas of tax from supply-chain optimisation to financial reporting. The firm also provides guidance on issues such as business taxes, indirect taxes and transaction taxes. The practice also advises on compliance, transfer pricing, human capital services, tax policy and controversy, and global trade services.
Guillermo Pérez leads the tax practice at Grupo GNP. The team provides tax advice, legal consulting, and transfer pricing to local and international clients. The firm can help clients with creating efficient multinational tax structures, advice on turnover VAT and also offers many other tax-related services. Many of the firm's three partners and four associates are professors in various universities.
The firm has clients in the consumer products, logistics, IT, construction, energy, assurance and financial services, and pharmaceuticals industries. Its client portfolio includes Caputo, Visa and Central Puerto. Over the past year, Grupo GNP has, among other work, advised clients on tax deductibility of expenses in advance, and one client on turnover tax savings by reformulating the company´s business.
JP O'Farrell Abogados's team consists of one partner and two other professionals. The practice provides counselling, representation and assistance to clients before administrative agencies and the courts. Constanza Soriano and John O'Farrell lead the practice. Over the past year, the firm has advised many companies on gross income tax.
Clients of the firm work in the manufacturing, food, agriculture, TMT, financial, energy and utilities, education, healthcare and computers, digital, software and online sectors.
"My experience with JP O'Farrell has been excellent," said a client.
KPMG's tax team provides a wide range of tax services to national and international clients in the areas of planning and compliance, transfer pricing, acquisitions, litigation, international tax and advice for expatriates. Lucio Giaimo leads the team.
Ignacio Fernández Borzese leads the tax department at boutique firm Luna Requena & Fernández Borzese (WTS Argentina). The firm's two partners and four other tax professionals specialise in tax advice and litigation. The firm advises local and foreign clients on every tax aspect related to making investments in Argentina, including tax planning and the provision of relevant contingencies that may affect the development of the projects.
The firm's professionals offer services in financial transactions, M&A, real estate, corporate tax, international tax, employment tax, customs and taxation of non-profit entities. The firm also works with tax controversies and represents its clients both at the administrative and judicial levels, and at the federal, provincial and municipal taxation levels.
In December 2015, the firm assisted Digital Virgo on the gross turnover tax and VAT implications on a local joint venture.
Clients of the firm work in the manufacturing, TMT, computers, software, online and digital, healthcare, energy and utilities industries to name a few.
M&M Bomchil's tax professionals offer tax advice, planning and litigation services to its clients, who work in the food and beverage, insurance, communications and energy businesses. The firm has been active in federal tax matters involving transfer pricing, the application of international tax treaties on income tax, and financial transactions and VAT on import of services. Its litigation cases include work on the personal assets tax, on the participation of Spanish and Brazilian companies in local corporations and claims derived from re-characterisations of debt into capital contributions made by tax authorities.
Head of tax Alejandro Messineo is a key contact in the firm. His practice focuses on national and international tax law advice and planning. He also has extensive experience in tax litigation. In addition, Messineo is a professor of international tax law and tax planning.
Marval, O'Farrell & Mairal takes part in sophisticated tax structuring work, complex cross-border transactions and high-level tax litigation for local and international clients. The firm has 31 tax professionals, among them five partners: Gabriel Gotlib, Horacio García Prieto, Walter Keiniger, María Inés Brandt and Fernando Vaquero. The tax team performs all types of advisory work including tax planning, transactional matters and litigation, at all levels of the courts.
The firm is advising Pan American Silver Corp in the adoption of a trial strategy aimed at avoiding the application of a new tax established by the province of Santa Cruz. A subsidiary company of Pan American Silver Corp has a mining establishment in the province. The Argentine Supreme Court of Justice issued a measure that suspended the obligation of the company to pay the tax. Subsequently, the tax was repealed by the province of Santa Cruz.
Peña, Freytes & Asociados is an accounting and tax firm with more than 30 years of experience. The firm advises both local and foreign companies.
Perez Alati, Grondona, Benites, Arntsen & Martínez de Hoz (h) offers a full service to its clients, including tax planning, M&A, cross-border transactions, design and implementation of corporate reorganisations and tax-free transfer of assets. The firm also has a strong litigation practice. Founding partner Manuel Benites is the leader of the team. His practice mainly focuses on tax litigation and advice on domestic and cross-border corporate transactions. Other key partners in the firm are Maximiliano Batista and Luis Marcelo Nuñez. Batista specialises in tax law and insurance law. Nuñez is experienced in complex tax claims and litigation before the Supreme Court, tax court, federal and local courts, and administrative bodies.
PwC has a staff of more than 300 professionals including accountants, lawyers and economics graduates and is one of the leading tax consultancies in Argentina. The tax practice focuses on advisory work in international taxation, outsourcing, expatriate services, transfer pricing and municipal taxes. Jorge San Martin leads the tax practice.
Rosso Alba, Francia & Asociados is a boutique firm with a leading reputation within international tax, transfer pricing and tax controversy. The team consists of three partners, other tax lawyers, an in-house economist and two accountants.
The firm has a diversified list of clients, such as Bunge, Noble Grains, Ford, BP and Nestlé. The firm currently advises half of the 20 largest export companies in Argentina.
This year the firm was hired by a client to provide a technical opinion on the amendment on cross-border transfer pricing aspects of commodity exports in compliance with the OECD guidelines.
Cristian Rosso Alba leads the department. He is a leading tax adviser who specialises in domestic and international tax planning, restructurings, reorganisations and international business transactions. A client described the firm as "one of the best", while a competing firm called Rosso Alba "a shining star within tax".
Guillermo Teijeiro leads the tax department at Teijeiro & Ballone Abogados. The firm has two other partners, Mariano Ballone and Gloria Gurbista, and six other tax professionals. The team specialises in domestic and international corporate tax advice, and administrative and judicial litigation for clients in various industries such as agriculture, food, manufacturing, energy and services.
Clients of the firm mainly come from TMT, manufacturing, food, fast-moving consumer goods (FMCG), agriculture, energy and utilities, and computers, digital, software and online. Clients include Dell, Siemens, Adecco and Hewlett Packard Argentina.
The firm recently assisted a client with advice and representation in a claim pursued by the tax authorities regarding gross turnover tax.
Teijeiro is experienced in serving multinational enterprises, banks, wealthy individuals, domestic start-ups and mature ventures in successfully structuring cross-border investments, M&A transactions, and business and financial deals. He also covers policy and technical tax advice to governmental bodies, multilateral credit and investment organisations.
|Tier 1 - Argentina|
|Bruchou, Fernández Madero & Lombardi, Taxand Argentina|
|EY (Pistrelli, Henry Martin y Asociados)|
|Marval, O'Farrell & Mairal|
|Tier 2 - Argentina|
|Asorey & Navarrine|
|Baker & McKenzie|
|Bulit Goñi & Tarsitano Abogados y Consultores|
|Perez Alati, Grondona, Benites, Arntsen & Martinez de Hoz (h)|
|Rosso Alba, Francia & Asociados|
|Teijeiro & Ballone Abogados|
|Tier 3 - Argentina|
|Estudio Beccar Varela|
|Luna Requena & Fernández Borzese (WTS Argentina)|
|Peña, Freytes & Asociados|
|Tier 4 - Argentina|
|Abeledo Gottheil Abogados|
|Allende & Brea|
|Tier 5 - Argentina|
|Cainzos, Fernández & Premrou|
|JP O’Farrell Abogados|