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January 26, 2023
2023-0156

Argentina issues new regulations on normalization program of local and foreign currency for construction investments and the incentive regime for Argentine investment and production

  • On 13 January 2023, the Argentine Government published Decree 18/2023 (the Decree) which incorporates new provisions regarding the voluntary disclosure program to promote construction and access to housing and the incentive regime for Argentine investment and production.
  • In addition, through Resolution 5317/2023 (Resolution 5317), Argentine tax authorities established the regulations for compliance with the incentive regime for Argentine investment and production.

Background

On 12 March 2021, the Argentine Congress enacted Law 27,613 establishing a voluntary disclosure program to promote construction and access to housing (the voluntary disclosure program). This regime enabled individuals and corporations residing in Argentina to voluntarily declare before the federal tax authorities (AFIP), the holding of foreign or local currency in Argentina and abroad within 120-calendar days from 12 March 2021 (later extended for additional 360-calendar days to 22 August 2022 through Law 27,679). The declared funds had to be temporarily used to purchase government bonds and invest in the development of real estate projects or the acquisition of second-hand property in Argentina.

On 17 November 2022, the Budget bill for 2023 incorporated an incentive regime for Argentine investment and production (the incentive regime) for Argentine individuals and corporations to voluntarily declare the holding of foreign currency in Argentina and abroad within 360-calendar days from 1 December 2022. The funds declared through this incentive regime may only be used for the payment of imports of goods or services destined to the productive activity.1

Normalization program of local and foreign currency to promote construction and access to housing

The Decree states that the declared funds of the voluntary disclosure program must be used for the development or investment in real estate projects in Argentina or for the acquisition of a second-hand property located in the country, provided that such transactions are carried out by 31 December 2024.

In addition, second-hand property is defined as property that, prior to the acquisition with voluntarily declared funds, had been inhabited or subject to lease, use, usufruct, habitation, or other property rights.

Incentive regime for Argentine investment and production

The Decree clarifies that the funds declared through the incentive regime can be applied to the payment of imports of goods only if they are used in the productive activity. With respect to payments of imports of services, the incentive regime allows the payment of services performed abroad, whose effective immediate use is carried out in Argentina.

Resolution 5317 states that the adherence to the incentive regime must be reported on AFIP´s website (www.afip.gob.ar), through the webservice "Incentive to Argentine Investment and Production - Law 27,679" (Incentivo a la Inversión y Producción Argentina - Ley 27,679, in Spanish), by completing Form 2077.

The submission of Form 2077 and the payment of the special tax imposed by the Budget bill must be performed in accordance with the following due dates:

  • 1 March 2023: for funds voluntarily declared between 2 December 2022 and 1 March 2023
  • 30 May 2023: for funds voluntarily declared between 2 March 2023 and 30 May 2023
  • 26 November 2023: for funds voluntarily declared between 31 May 2023 and 24 November 2023

Finally, Resolution 5317 establishes that the imports of goods or services to be paid with the funds voluntarily declared through the incentive regime must be registered through the AFIP's webservices "Import System of the Argentine Republic" (Sistema de Importaciones de la República Argentina (SIRA), in Spanish) and the "Import System of the Argentine Republic and Payment of Services to Foreign Countries" (Sistema de Importaciones de la República Argentina y Pagos de Servicios al Exterior (SIRASE), in Spanish).

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For additional information with respect to this Alert, please contact the following:

Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

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ENDNOTE

1 For more information, see EY Global Tax Alert, Argentina enacts tax incentives and voluntary disclosure program to promote construction and access to housing, dated 23 March 2021, Argentine Lower House of Congress approves Budget bill for 2023, dated 14 November 2022 and Argentine Congress approves Budget bill for 2023, dated 7 December 2022.

 

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