• Service: Tax, International Executive Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 9/3/2013

Argentina - Pending changes to dividend withholding, capital gain taxation 

September 3: Proposed legislative changes in Argentina are pending before Congress and, if enacted, would revise the rules concerning dividend withholding tax and the tax treatment of capital gains.

As proposed, the legislation (Spanish) [PDF 95 KB] includes provisions to impose a tax on capital gains at a rate of 15% and a tax on certain dividend distributions at a rate of 10%.

KPMG observation

While the legislation proposals are currently pending consideration by the legislature, observers anticipate that the changes could be quickly approved and enacted into law.

The legislative language of the proposals, however, is not clear with respect to certain items. For example, concerning the withholding tax on dividends—

  • Would the 10% on dividends be treated as a tax liability of the Argentine entity or the shareholders?
  • If the 10% dividends tax is deemed to be a tax liability of shareholders, could the rate be reduced pursuant to income tax treaty provisions, and would this create a situation in which there could be two withholding tax rates if the equalization tax measures were to apply?
  • Would the dividend withholding tax apply to taxpayers located in Tierra del Fuego?

Uncertain areas concerning the tax to be imposed on capital gains include—

  • How would taxpayers determine their tax basis in shares for purposes of the capital gains tax? Would basis be: acquisition costs plus adjustments?
  • How would capital reductions be treated?
  • How would share redemptions (adqusición de acciones propias) be treated?
  • What would be the effect on an Argentina subsidiary of mergers involving foreign shareholders?

For more information, contact a tax professional with the KPMG member firm in Argentina:

Rodolfo Canese

+54 11 4316 5753

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