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Amendments to Tax on Bank Credits and Debits

Amendments to Tax on Bank Credits and Debits

Executive Decrees No. 409/18 (published in the Official Bulletin on May 7, 2018) and No. 463/18 (published in the Official Bulletin on May 16, 2018) contemplate several changes in the system governing the Tax on Bank Credits and Debits (hereinafter, the “TBCD”).

1.Increases in Payments on Account of Taxes: As set forth in Executive Decree No. 409/18, it is possible to compute as payment on account in respect of Income Tax, Minimum Assumed Income Tax or  Special Charge on Cooperatives´ Capital (hereinafter referred to as the “Taxes”), a percentage equal to 33% of the TBCD levied at a 0,6% rate on credits as well as on debits on bank accounts.

Thus, even though the percentage of the payment on account is reduced from 34% to 33%, it is now contemplated that a percentage of tax triggered by debits on bank accounts may also be computed as credit.

Furthermore, taxpayers subject to the 1,2% rate may compute, as payment on account of the Taxes, a percentage of 33% of the amounts paid by themselves or, where appropriate, assessed and collected by the collection agent. Thus, the percentage of payments on account has been increased from 17% to 33%.

In case of taxpayers liable for payment of the TBCD at lower rates, it is now stipulated that the percentage to be computed as payment on account shall be 20%. This aspect was not contemplated in the previous regulation.

As concerns companies under the system for promotion of micro, small and medium-sized companies (MIPYMES) – that provides for a special set-off system whereby the TBCD paid may be set off against Income Tax until reaching 100% in case of micro and small companies and up to 50% in case of medium-sized tier 1 industrial companies-, Executive Decree No 409/18 has increased the percentage of payments on account for medium-sized tier 1 industrial companies from 50% to 60%.

Credit may be computed in the annual returns for Taxes or the respective advance payments. The remaining credit that had not been offset may not be set off against other taxes for which the taxpayer is liable or the subject-matter of requests for refunds or transfer in favor of third parties, although it may be carried forward, until exhaustion thereof, to other fiscal periods for tax purposes.

The amendments referred to above shall become effective for advance payments and balances of returns for the Taxes for fiscal years commencing as of January 1, 2018, in respect of tax credits arising from taxable events occurred since such date.

  1. Exemption for transactions involving conveyance of title to real property: Pursuant to Decree No. 463/18, for the purpose of promoting real estate transactions via the use of banking services, some changes were made in connection with the TBCD so as to release conveyances, means of payment or movements related to conveyance of title to real property for a valuable consideration from payment of the tax, as specified below:

(i) rendering of accounts regarding collection efforts involving checks to pay off amounts due (cheques cancelatorios) or for financial payment, intended to make payments on conveyance of title to real property for a valuable consideration.

(ii) rendering of accounts regarding collections made, unless the relevant amounts are credited into current accounts in the name of the beneficiary and ordering party of the collections, when the origin and/or intended use of the funds is the conveyance of title to real property for a valuable consideration and always provided that such funds are debited from or credited into accounts with financial institutions specified in Law No. 21526, as amended, held by residents in Argentina. 

(iii) current accounts debits and credits applied or originated in conveyance of title to real property for a valuable consideration. Debits and credits arising from the use of checks to pay off amounts due or for financial payments, applied or originated in such transactions, are included.

For the purposes of this beneficial treatment, “conveyance of title to real property for a valuable consideration” means: the execution of a preliminary sales agreement or similar document whereby possession to the real property is delivered and any act intended to consummate conveyance of title of real property located in Argentina, always provided that the bank account holders are residents in Argentina and the piece of real property is appropriately identified.

This amendment is applicable to taxable events occurred since May 17, 2018.

For further information, please contact Leandro H. Cáceres at + 54 11 4319 7100.