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In brief

On 6 May 2024, Decree No. 385/2024 was published in the Official Gazette, extending the scope of the Impuesto PAÍS (“PAIS Tax“) to include the acquisition of foreign currency to distribute profits and dividends, as well as to repatriate nonresidents’ portfolio investments, generated from payments received in Argentina for these concepts from 1 September 2019. In addition, the tax will also apply to the subscription of BOPREAL bonds for the previous purposes.


In focus

The bill introduces the following provisions:

1. Profits and dividends: The taxable event for the PAIS Tax has been extended to include the acquisition of foreign currency by Argentine residents to pay obligations related to profits and dividends, under the terms of the “Régimen Informativo Contable Mensual para Operaciones de Cambio” (Monthly Accounting Information System for Foreign Exchange Operations) issued by the Central Bank, code I03, as determined by the Central Bank within the framework of the official foreign exchange market access regulations. These transactions are now included in letter a) of Section 35 of Law No. 27541.

The applicable tax rate is 17.5% on the total amount of each transaction.

2. Investment repatriation: The PAIS Tax will be levied on the purchase of foreign currency to repatriate nonresidents’ portfolio investments generated by the collection in Argentina of profits and dividends received from 1 September 2019, as determined by the Central Bank within the framework of the official foreign exchange market access regulations.

The applicable tax rate is 17.5% on the total amount of each transaction.

The purchaser of the foreign currency will be responsible for paying the tax. The entity authorized by the Central Bank to operate in the foreign exchange market, through which the transaction was carried out, will be obliged to act as a collection and settlement agent at the time of the foreign exchange transaction.

3. Subscription to “Bonds for the Reconstruction of a Free Argentina” (“BOPREAL”): The subscription in Argentine pesos of the BOPREAL issued by the Central Bank, or of any bonds or securities that the Central Bank may issue in the future for the same purpose, will be subject to the PAIS Tax. This applies to those who acquire these bonds or securities to (i) pay profits and dividends, as determined by the Central Bank within the framework of the official foreign exchange market access regulations, and/or (ii) repatriate nonresidents’ portfolio investments generated from profits and dividends received in Argentina from 1 September 2019, as determined by the Central Bank within the framework of the official foreign exchange market access regulations.

The applicable tax rate is 17.5% on the total amount of the transaction for which the bonds or securities have been subscribed.

The subscriber will be responsible for paying the tax. The financial institution through which the subscription was made will be obliged to act as the withholding and settlement agent. The withholding tax must be applied at the time of paying in the subscription.

Spanish version

Author

Martin Barreiro is experienced in various areas of tax law. He is a member of the Buenos Aires Bar Association, the American Chamber of Commerce in Argentina, the Tax Sub-Committee and the Argentine Association of Taxation Studies. His extensive list of publications include "New Argentine Social Security System" for the International Company and Commercial Law Review and "The S.R.L. in the tax planning of US investors in Argentina" for the Economic and Tax Journal.

Author

Juan Pablo Menna is a partner in the Tax Practice Group in Baker McKenzie, Buenos Aires. He is a member of the Buenos Aires Bar Association and the Argentine Association of Fiscal Studies, and was a professor in Austral University.

Author

Bernardo Trueba is an Associate in Baker McKenzie, Buenos Aires office.