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Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Argentina 2013
COMBINED: PHASE 1 + PHASE 2, INCORPORATING PHASE 2 RATINGS
November 2013 (reflecting the legal and regulatory framework as at August 2012)
This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the OECD or of the governments of its member countries or those of the Global Forum on Transparency and Exchange of Information for Tax Purposes. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Please cite this publication as: OECD (2013), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Argentina 2013: Combined: Phase 1 + Phase 2, incorporating Phase 2 ratings, OECD Publishing. http://dx.doi.org/10.1787/9789264205505-en
Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews ISSN 2219-4681 (print) ISSN 2219-469X (online)
OECD 2013
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TABLE OF CONTENTS 3
Table of Contents
About the Global Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Information and methodology used for the peer review of Argentina. . . . . . . . . .11 Overview of Argentina. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 A. Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 20 38 42
B. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 B.1. Competent Authoritys ability to obtain and provide information . . . . . . . . 46 B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 54 C. Exchanging Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.1. Exchange of information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.2. Exchange of information mechanisms with all relevant partners . . . . . . . . C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 57 58 68 70 75 76
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4 TABLE OF CONTENTS Summary of Determinations and Factors Underlying Recommendations. . . . 85 Annex 1: Jurisdictions Response to the Report . . . . . . . . . . . . . . . . . . . . . . . . . 89 Annex 2: List of Exchange of Information Mechanisms . . . . . . . . . . . . . . . . . . 91 Annex 3: List of Laws, Regulations and Other Relevant Material . . . . . . . . . . 96 Annex 4: Persons Interviewed During the On-Site Visit . . . . . . . . . . . . . . . . . . 97 Annex 5: Flow Diagram of the Process of Management Applicable to Incoming Requests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
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EXECUTIVE SUMMARY 7
Executive Summary
1. This report summarises the legal and regulatory framework for transparency and exchange of information in Argentina as well as the practical implementation of that framework. The international standard, which is set out in the Global Forums Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information, is concerned with the availability of relevant information within a jurisdiction, the competent authoritys ability to gain access to that information, and in turn, whether that information can be effectively exchanged in a timely manner with its exchange of information partners. 2. The Argentine Republic is the second largest country of South America, with a population of 40.6 million and an economy driven by its export-oriented agriculture. 3. The legal and regulatory framework for the availability of information in Argentina is in place. All information about the owners and other stakeholders of relevant entities or arrangements is available at any time through the tax administration, as a result of a well developed systematic information gathering system. In 2012 the tax administration strengthened existing measures that ensured the reporting of identity information related to domestic trust-like fideicomisos to the tax administration, and introduced similar reporting obligations for any foreign trust with a resident trustee. Companies, like all other commercial entities, must keep their accounting documents and underlying documentation for at least ten years. Banks and other financial institutions are subject to know-your-customer obligations and must keep information about transactions carried out by their customers for 10 years (Part A of the report). 4. The Argentinean authorities make use of their broad powers available for domestic taxation purposes in order to exchange information. The Argentinean tax administration can access accounting and banking information and data on the ownership of legal entities, pursuant to the Tax Procedure Law.
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8 EXECUTIVE SUMMARY
5. Argentina has a network of agreements for exchange of information in tax matters with 52 partner jurisdictions pursuant to double tax conventions (DTC), tax information exchange agreements (TIEA) and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (the Multilateral Convention). Only half of these are in force, but Argentina ratified the Multilateral Convention on 30 May 2012 and has indicated that the ratification instrument will be deposited shortly in order to bring the Convention into force in respect of Argentina. Argentina continues to expand its network of exchange of information instruments, with negotiations underway with additional jurisdictions. However, Argentina has recently terminated its DTCs with Chile and Spain, two of its main EOI partners, with effect from 1 January 2013. This entails a de facto termination of the accompanying inter-institutional TIEAs with the respective EOI partners. Whilst Argentina and Spain will be able to exchange information for tax purposes under the Multilateral Convention once it enters into force in both jurisdictions, there will be no EOI mechanism between Argentina and Chile from 2013. Accordingly, element C.2 is found to be in place, but certain aspects of the legal implementation of the element need improvement. 6. The authority in charge of exchanging information for tax purposes is located within the Federal Administration of Public Revenue. The organisation of the exchange process and the resources devoted to this activity were completely revamped in 2010 and important progress in the handling of requests received from partner jurisdictions has been pursued since 2011. In particular, response times have started to decrease and further improvements are expected with the development of new IT tools and internal guidelines. Local tax auditors in charge of gathering the information that is not already contained in the central tax database of Argentina are also increasingly aware of the importance of EOI, which should further improve the response times of Argentina. 7. It remains that Argentina does not receive a large number of requests: 21 for the period 2009-2011 (on 273 persons), from seven treaty partners, mainly Brazil, Chile and Spain. Argentina globally sends more requests than it receives and the number of outgoing requests has been increasing over the last two years. 8. Ultimately, several EOI partners of Argentina praised the quality of its co-operation since the restructuring of its EOI system. Argentina should monitor the functioning of the new EOI Division and internal procedures for answering EOI requests as practice develops, and improve them as necessary.
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EXECUTIVE SUMMARY 9
9. Argentina has been assigned a rating 1 for each of the 10 essential elements as well as an overall rating. The ratings for the essential elements are based on the analysis in the text of the report, taking into account the Phase 1 determinations and any recommendations made in respect of Argentinas legal and regulatory framework and the effectiveness of its exchange of information in practice. On this basis, Argentina has been assigned the following ratings: Compliant for elements A.1, A.2, A.3, B.1, B.2, C.1, C.3 and C.4, Largely Compliant for element C.2 and Partially Compliant for element C.5. In view of the ratings for each of the essential elements taken in their entirety, the overall rating for Argentina is Largely Compliant.
1.
This report reflects the legal and regulatory framework as at the date indicated on page 1 of this publication. Any material changes to the circumstances affecting the ratings may be included in Annex 1 to this report.
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INTRODUCTION 11
Introduction
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12 INTRODUCTION
12. The assessment was conducted by an assessment team composed of two expert assessors and a representative of the Global Forum Secretariat: Ms. Monica Olsson, Senior tax lawyer, Norwegian Directorate of Taxes; Ms. Oshna Maharaj, Manager, International Development and Treaties, South African Revenue Service; and Ms. Gwenalle Le Coustumer from the Global Forum Secretariat. 13. The ratings assigned in this report were adopted by the Global Forum in November 2013 as part of a comparative exercise designed to ensure the consistency of the results. An expert team of assessors was selected to propose ratings for a representative subset of 50 jurisdictions. Consequently, the assessment teams that carried out the Phase 1 and Phase 2 reviews were not involved in the assignment of ratings. These ratings have been compared with the ratings assigned to other jurisdictions for each of the essential elements to ensure a consistent and comprehensive approach. The assignment of ratings was also conducted at a different time from those reviews, and the circumstances may have changed in the meantime. Readers should consult Annex 1 for information on changes that have occurred.
Overview of Argentina
14. The Argentine Republic is a South American country bordered by Brazil and Uruguay on the North-East, Bolivia and Paraguay on the North and Chile on the West and South. Argentina covers 2.8 million square kilometres (the second largest country in South America) and has a population of 40.6 million, over a third of which is located in the Buenos Aires province. 2 The currency is the Argentine Peso (ARS; on 8 June 2012 ARS 1 equal USD 0.22 and EUR 0.18). 15. After having suffered a severe financial crisis, Argentina devalued the peso in 2002, which raised the competitiveness of Argentinas exports. Argentina also developed a policy of attracting foreign direct investment. Argentinas GDP in 2011 was USD 323.4 billion, with a GDP per capita of USD 8 875. It has the third largest economy and the fifth highest nominal GDP per capita in Latin America. Agricultural products account for over half of Argentinas export soybean derivatives comprise the main exports. Other important exports include corn, wheat, transport and cargo vehicles,
2. Figures are taken from the following sources: www.inversiones.gov.ar/en/ investment-guide/; http://un.data.org; and http://stat.wto.org/CountryProfile/ WSDBCountryPFView.aspx?Language=E&Country=AR. According to WTO figures for 2010, they made up Argentinas exports and imports as follows: the EU (imports: 17.3%, exports: 16.4%); China (imports: 13.5%, exports: 8.5%); the USA (imports: 10.8%; 5.4%); Chile (exports: 6.6%); and Mexico (imports: 3.2%).
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INTRODUCTION 13
crude oil and petroleum, sunflower seed oil, ship and airplane fuels and lubricants. Manufactured goods comprise over 80% of Argentinas imports with machinery parts, organic chemical products and mineral fuel and oils forming significant import categories. 16. Brazil is Argentinas largest trading partner in terms of both imports and exports; it accounted for over 20% of Argentinas exports and 30% of its imports in 2010. Other main trading partners include the European Union (mainly Germany and the Netherlands, but also Spain for exports and Belgium for imports), China, the United States, Chile (for exports) and Mexico (for imports). Investments into Argentina, which amounted to USD 6.3 billion in 2010, originate primarily from the EU; the United States; China; Hong Kong, China; Brazil; Singapore and Australia. 17. Argentina is active in the international arena: it is a founding member of the United Nations, Mercado Comn del Sur (Mercosur), the Union of South American Nations, the Organisation of Ibero-American States, the World Bank Group and the World Trade Organisation, and is one of the major G-20 economies.
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14 INTRODUCTION
with the judicial power of the Provinces. All matters fall under the autonomous jurisdiction of the Provinces apart from those exceptionally designated as under the Judiciary Power of the Nation. Broadly, cases involving the National Government or any of its agencies, or conflicts between neighbouring Provinces fall within exceptional matters reserved for the Judicial Power of the Nation. Both the federal and the provincial court systems are made up of a Supreme Court, appellate courts and lower courts. The Supreme Court of Justice of the Nation is the highest court of the land it is made up of nine judges who are appointed by the President and approved by the Senate. The Supreme Court of Justice of the Nation has the power to declare legislative acts unconstitutional. Courts are competent in tax cases, depending on the tax law at stake: any litigation related to a federal tax is heard by a federal court, whereas litigation related to provincial taxes are heard by provincial courts. 22. The Argentine legal system is based on the civil law tradition. The hierarchy of legal norms in the Argentine legal system ranks as follows: (i) the National Constitution and International Treaties related to Human Rights; 3 (ii) other International Treaties; (iii) the federal and provincial Laws; and (iv) Decrees of the Executive National Power. The National Constitution states that taxes and exemptions from taxes must be established by law. Laws and decrees can further be complemented by resolutions, for instance from the Federal Administration of Public Revenue. Resolutions are binding rules but cannot contradict laws and decrees nor create new tax obligations. 23. National law, under the Civil Code (Article 33), provides for the creation of public and private legal entities in Argentina. The regulation of commercial companies is governed by national law under Law No 19.550 integrated into the Commercial Code (see section A.1 below).
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INTRODUCTION 15
25. Income Tax, collected at the national level, is applicable to both legal and natural persons (Law No 20.628). The rate of Income Tax applicable to legal persons is 35% of total earnings for those considered resident in Argentina and 35% of Argentine source income for non-resident entities. Natural persons are subject to a progressive Income Tax rate of 9% to 35%, calculated on net income subject to tax. In 2011, the total amount of Income Tax collected amounted to ARS 109 billion (USD 24 billion, EUR 19.1 billion). Presumed Minimum Income Tax, at an annual rate of 1%, is applicable on all worldwide assets of Argentine-resident companies and on assets located in Argentina which belong to non-resident entities and individuals. Amounts paid as Income Tax may be considered payment on account for Presumed Minimum Income Tax and no further amounts will be payable where the Income Tax amount is greater than the Presumed Minimum Income Tax amount otherwise payable. There is also a simplified tax regime (monotributo) for low revenue taxpayers with gross annual incomes of up to ARS 300 000 (USD 66 900, EUR 53 650), which may apply instead of Income Tax, Value Added Tax and Social Security. 26. For Income Tax purposes, a natural person is considered a resident of Argentina when he/she is (i) Argentine (or a naturalised foreigner); or (ii) a foreigner with a permanent residence permit in Argentina or who has legally resided in the country for twelve months (Income Tax Law, s. 119). Argentine nationals lose their Argentine residency if they become permanent residents of a foreign country, or if they stay abroad for 12 uninterrupted months. In relation to legal persons, incorporated business companies and other business forms (such as one-person companies, civil associations, foundations, etc.) are considered resident in Argentina if they are established under the laws of Argentina. Argentine branches of companies established abroad, as well as companies established abroad but with their effective place of management and control in Argentina are also considered resident entities for the purpose of Income Tax. Residents, whether legal or natural persons, are subject to Income Tax on their worldwide income, including their capital gains. Nonresidents, such as foreign companies without a branch or other permanent establishment in Argentina, are subject to Income Tax on their Argentine source income only. This review focuses on tax legislation and administration on the federal, national level, as the DTCs of Argentina cover the federal taxes. 27. The AFIP grants every taxpayer (including both natural and legal persons) a unique taxpayer identification number (clave nica de identificacin tributaria, CUIT) when they register with it. In order to register, taxpayers are required to submit an online application form which contains information including name, address, share capital details, directors and activities performed this is discussed further in Parts A and B.
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16 INTRODUCTION
28. The AFIP is the (delegated) competent authority for exchange of information. The AFIP is also empowered to sign TIEAs with other Tax Administrations. In 2010, the International Taxation Directorate under the Sub-Directorate General of Tax Examination was created in AFIP to modernise the control of international transactions. The International Information Management Department was created under this Directorate specifically for the purpose of managing and processing all forms of international information exchanges in tax and customs matters (see section C.5 below).
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INTRODUCTION 17
there were 181 insurance entities operating in Argentina. The private pension system, which was established in 1994, was nationalised in 2008. 34. In order to practice law in Argentina, lawyers must register with professional bodies for the jurisdiction in which he/she will practice. To practice before national courts, lawyers must register with the Bar Association of the Federal Capital. Accountants must be registered in the respective councils of each jurisdiction in which they operate.
Recent developments
35. Argentina signed the amended OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters, in November 2011. On 30 May 2012, Argentina ratified the Multilateral Convention and Argentina has indicated that the ratification instrument will be deposited shortly. 36. Argentina recently terminated its DTCs with Chile and Spain, two of its main EOI partners, with effect from 1 January 2013. This entails a de facto termination of the accompanying inter-institutional TIEAs with the respective EOI partners. There will be no EOI mechanism between Argentina and Chile from 2013 (unless a new EOI agreement is negotiated and put in place by then). 37. As Argentina has ratified the Multilateral Convention, despite the abovementioned termination, Argentina and Spain will be able to exchange information for tax purposes under the Multilateral Convention once it enters into force in both jurisdictions. 38. On 18 April 2012, the AFIP passed a new General Resolution n 3312 establishing a registration regime which reinforces existing obligations regarding information on the operations of Argentinean fideicomisos and sets out similar reporting obligations in relation to foreign trusts (see further discussion in Section A.1.4).
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A. Availability of Information
Overview
39. Effective exchange of information requires the availability of reliable information. In particular, it requires information on the identity of owners and other stakeholders as well as information on the transactions carried out by entities and other organisational structures. Such information may be kept for tax, regulatory, commercial or other reasons. If such information is not kept or the information is not maintained for a reasonable period of time, a jurisdictions competent authority 5 may not be able to obtain and provide it when requested. This section of the report describes and assesses Argentinas legal and regulatory framework on availability of information. It also assesses the implementation and effectiveness of this framework. 39. All information about the owners and other stakeholders of an entity or arrangement subject to registration and tax obligations in Argentina is available at any time within the tax administration. 40. The most common entities in Argentina are limited liability companies (SRL) and companies limited by shares (SA). The tax administration maintains information on the identity of all the shareholders of these entities. There are no longer any bearer shares in Argentina since all bearer shares
5. The term competent authority means the person or government authority designated by a jurisdiction as being competent to exchange information pursuant to a double tax convention or tax information exchange agreement.
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44. The present section considers the legal and regulatory framework relating to companies, bearer shares in joint-stock companies, partnerships and other legal entities (trusts, foundations, etc.), as well as enforcement provisions to ensure compliance with the laws on the ownership of relevant entities. 45. Entities are classified in two broad categories in Argentinean law: public and private entities. Public entities are the national government, provinces, municipalities, their autonomous entities and the Catholic Church. 46. Private entities are divided between civil and commercial entities. Commercial entities are governed by the Civil Code, the Commercial Code and Law 19.550 on Commercial Companies. A commercial company or partnership exists when two or more persons, in an organised fashion, and through one of the corporate types set out in Law 19.550, agree to make contributions
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to produce or commercialise goods or services, sharing profits and losses. A private entity which is not of a commercial nature is a civil entity. 47. Argentinean companies and partnerships are both legal persons. The distinction between them is depends on whether the creation of the entity is based around the members capital contribution (in companies or sociedades de capital ), or the members themselves (in partnerships or sociedades de personas). In the latter case, the management falls on the members, and equity in the entity cannot be passed freely to third parties. 48. In addition, the notion of trader (comerciante) is key in Argentina commercial law. The Commercial Code defines as traders or businesspersons all individuals who, having legal capacity to contract, perform acts of commerce on their own account and as a habitual profession (s. 1), and in general all persons engaged in trade, from a grocer to a bank. An act of commerce underlies, for instance, the acquisition and selling of a movable property for profit; manufacturing; exchange, brokerage and auction transactions. It includes investment activities. Commercial entities and merchants (together traders) are bound by a number of obligations, including registration in the Commercial Register and the requirement to keep accounting records for a minimum of ten years. 49. The Argentinean authorities indicate that almost all requests for ownership information concern companies (SA and SRL). This is consistent with input received from peers. A few requests were also related to individuals linked to foundations or investments in Argentina. No EOI partner of Argentina indicated that they had not received the information requested because this type of information was not available. Information on beneficial ownership also represents 82% of the information requested from Argentina over the last three years, especially because of a request on more than 200 persons received from a partner. Other types of identity information requested include checking the residence of the person and the registration of individuals.
6.
Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information
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company). The only owners of these companies being public institutions of Argentina, their ownership structure is clear. 51. There are around 390 500 companies registered in the tax database of Argentina as of November 2011: 196 235 SA, 188 048 SRL, 3 768 SCA, 51 joint stock company with state-owned majority, and 307 State-owned corporations. None of these entities can be owned by a single person. 52. Companies incorporated abroad may also engage in business in Argentina. 2 456 branches of foreign companies are registered with the AFIP. The fiscal domicile of a legal person in Argentina depends on its place of legal domicile, or on the place of its effective management and control, when it differs from the legal domicile (Law 11.683, s. 3). 53. Full ownership information on companies is available in Argentina. The Commercial register contains some information, and the tax administration maintains a significant amount of identity and ownership information in its database, through a network of information statements that taxpayers and third parties must file periodically or upon the occurrence of certain events in the life of the company.
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payment (in the currency used and in Argentinean pesos), as well as the corresponding change of corporate control. The obligation applies to all transfers performed after 1 January 2012. Before this new obligation was introduced, stock brokers were already obligated to report to the AFIP the transactions they were involved in, pursuant to AFIP GR 2386/2007. Pursuant to art. 7 of this resolution, they send to the AFIP a summary of the operations performed, and indicate the amount of the transactions performed for each client when the amount is above ARS 150 000 (USD 33 450, EUR 26 820). 60. With this new 2012 resolution, the AFIP can now cross-check electronically the information provided by the companies and shareholders online. 61. As a result of the various laws and regulations applicable, the AFIP maintains full ownership information on Argentinean companies and the IGJ maintains no information that the tax administration does not also maintain. In any event, the AFIP has free access to the national and provincial registers (Law N 26.047, s. 3). 8
Foreign companies
62. Law N 19.550 (ss. 118-124) provides that companies incorporated in a foreign country and which carry out activities in Argentina through a branch are regulated pursuant to the law of their country of establishment. In addition, for a foreign company to regularly engage in Argentina in acts included in its corporate purpose, set up a branch or any other type of permanent representation, it is required to evidence its existence in accordance with the laws of its country, and indicate a domicile in Argentina. 63. Notwithstanding, Law 19.550 also prescribes that a company incorporated under foreign law but the main office or the business of which is in Argentina is considered as a local company for company law purposes, and must follow the same procedure of creation as a local company (s. 124), in which case it falls under the supervisory powers of the IGJ (Law 22.315, s. 8). In such circumstances, the original incorporation of the foreign company is deemed valid and, under Argentinean law, the company will be treated as legally equal to Argentine companies that have complied with the formalities established in Law N 19.550. 64. The IGJ maintains a National Registry of Foreign Companies, which registers foreign companies that carry on business in Argentina by means of a permanent representation or participates in local companies (Law N 19.550, ss. 4, 118 and 123; Law 22.315, s. 4). IGJ Resolution 7/05 rules that the registration with the Register of Companies is subject to the provision of
8. The information contained in the various Registers of Commerce can be consulted by the public physically but not online (Law N 19.550, s. 9).
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Nominees
70. The concept of nominee that exists in some jurisdictions does not exist in Argentinean law. Registered shares issued by companies incorporated in Argentina are in principle held by their beneficial owner. 71. The Argentinean law expressly penalises the existence of hidden and apparent partners (Law N 19.550, s. 34). Pursuant to s. 34, the hidden partner is an unlimited and jointly liable member of the company. Argentinean case law determines that a contract between a hidden member and an apparent (registered) shareholder constitutes a punishable fraudulent manoeuvre. 9 The person whose name appears as a member is considered as having the obligations and duties of a member vis-a-vis third parties, but is not considered as such with regard to the normal members, whether or not he/she has a stake in the companys profits. Hidden partners also entail some tax sanctions. Within the verification and audit powers established in section 35 of the Tax Procedure Law N 11.683, and based on the Economic Reality Principle expressed in section 2 of said law, the AFIP is empowered to pierce the corporate veil and redefine the situation in the light of the underlying facts, establishing the legal presumption of an unjustified increase in net equity for the hidden partner who did not reveal its real taxpaying capacity. In addition, sanctions (interests and fines) are also mentioned in Law N 11.683, as well as the possibility of imprisonment according to the Tax Criminal Law. When that is the case, the Financial Information Unit receives a report of suspicious transaction. 72. As a result, nominee ownership or similar arrangements are not allowed and are punishable in Argentina.
Service providers
73. Identity and ownership information of companies and other Argentinean legal entities being fully maintained by the AFIP directly, the AFIP never relies on service providers to provide such information, as service providers subject to the AML/CFT laws and regulations of Argentina do not maintain individually any ownership information that the AFIP does not maintain itself. 74. The AML Law 25.246 as amended and the FIU resolutions set the basic obligations of subject entities to collect identity and other information from their customers and third parties on behalf of which customers may act. The minimum information requested from customers includes their corporate name, date and company registration number, tax registration number, date of articles of incorporation, copy of updated by-laws, address (street, number,
9. Commercial Court; Juhal, Eduardo J. v. Fumo, Claudio A. Yotros; 9/08/10.
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a sociedad colectiva (general partnership) is a commercial entity with at least two members (considered as traders) who are jointly, personally and severally liable for the partnerships debts (Law N 19.550, ss. 125-139); a sociedad en comandita simple (SCS or limited partnership) is a commercial entity that comprises two classes of members: general partners, who are jointly and severally liable for the partnerships debts, and limited partners, who incur no liability for the partnerships debts and whose risk is limited to the amount of their contribution (they are essentially financial backers). Limited partners cannot carry out any act of management (Law N 19.550, ss. 134-140); Sociedad de Capital e Industria (capital and industry partnership): the general partners are liable to the same extent as partners of general partnerships, and partners who contribute with their industry liable only up to the amount of their share of profits to be received (Law N 19.550, ss. 141-145). This type of entity is rarely used, and only 88 are registered. De facto or irregular partnerships: these are entities not organised in conformity with the legal types of entities under Law N 19.550 and unregistered entities. Their members are jointly liable for the entitys operations (Law N 19.550, ss. 21-26). These entities are by definition not registered with the Registrar of Commerce.
80. As of November 2011, there were 2 612 general partnerships, 2 881 limited partnerships and 88 capital and industry companies registered with the tax administration. There were also 99 767 de facto partnerships registered with the AFIP under the simplified tax regime that are tax transparent. These are mainly sole traders (kiosks) and small restaurants (as companies and partnerships cannot be created with a single shareholder/owner).
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
Argentinean resident from acting as a trustee, or that prevents a trustee of a foreign trust from investing or acquiring assets in Argentina. 87. Measures are in place to ensure the availability of identity information for both domestic fideicomisos and relevant foreign trusts. Since 2008, fiduciarios of domestic fideicomisos have been required to report the identity of their fiduciantes (settlors), fiduciarios (trustees), fideicomisarios (ultimate beneficiaries) and beneficiarios, where applicable, to the tax administration. This reporting obligation ensures the availability of such information to the tax administration from 2005 onwards. Further measures taken in 2012 extended the reporting obligation to foreign trusts with a resident trustee, which ensured the availability of information on settlors, trustees and beneficiaries of such trusts.
Argentinean fideicomisos
88. Argentina introduced the fideicomiso in Law 24.441 of 1995 (ss. 1 to 26). Argentinean fideicomisos are created by a contract or will by which a person ( fiduciante or settlor) transfers the trust property title to another person ( fiduciario or trustee), who is bound to manage it for the benefit of whoever is appointed by the contract (beneficiario or beneficiary), and to transfer it upon a specific period of time or the fulfilment of a term (not exceeding 30 years) to the ultimate beneficiary ( fideicomisario, who can be the settlor or the beneficiary). 89. The interest in using this type of contract is that the fideicomiso property constitutes an equity separated from that of the fiduciario and of the fiduciante (s. 14). As a result, the fideicomiso property is exempted from any individual or joint action by the creditors of either the fiduciante or the fiduciario (s. 15). The rules of the Civil Code apply to the contract and to the assets subject to a fideicomiso. 90. The contract must contain information on the co-contractors, who are the fiduciante and the fiduciario, as well as on the (ultimate) beneficiaries. The beneficiaries may be individuals or legal entities, existing or not upon the execution of the contract. In the last case, the contract must contain all the information to enable their future identification (s. 2). 91. There are ordinary and financial fideicomisos. In a financial fideicomiso the fiduciario is a financial institution or a corporation specially authorised by the National Securities Commission to act as a financial fiduciario, and the beneficiaries are the holders of share certificates of the fideicomiso property or of debt securities guaranteed by the property transferred (ss. 5 and 19). The share certificates and debt securities are regarded as securities and may be subject to public offering. Financial fideicomisos
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
Foreign trusts
96. Foreign trusts are not recognised in Argentina but the Argentinean tax authorities took measures to ensure the availability of information that identifies the settlor, trustee and beneficiaries of trusts administered in Argentina or in respect of which a trustee is resident in Argentina. 97. As indicated above, on 18 April 2012, the AFIP adopted a new General Resolution N 3312 on a regime of information and registration of the operations of financial and non-financial Argentinean fideicomisos and foreign trusts. Article 1 of the General Resolution expressly refers to residents in Argentina who act as trustees or the like, settlors or the like or beneficiaries of trusts created in another country. The explanatory notes to the resolution clarify that this covers trusts, fiduciary entities, or other figures of equivalent nature created in a foreign country in accordance with the legislation in force in the relevant country. 98. As for domestic fideicomisos, these persons must provide information electronically on an annual basis (in July for the preceding year), and the trustee must register some events in the life of the trust with the AFIP within 10 days of their occurrence (s. 8). 99. First, the resident trustee of foreign trusts must inform the AFIP, within the next 10 working days of the creation or termination of the trust, any change of settlor or beneficiary, the transfer of the trusts participations or rights, the addition of assets, any modification to the contract, and the allocation of benefits (s. 8 and Annex IV). 100. The General Resolution lists the data that must be provided for each of these events. When a foreign trust is created in respect of which a trustee, settlor or beneficiary is resident in Argentina, the trustee must indicate the name of the trust; its date of creation and term; the country where it is created and the legislation in force; the tax identification number of the trust in the country of creation; the type or class of trust and its object; the details of the trustee, settlors, beneficiaries, and ultimate beneficiaries; identifying details on the assets and the total amount of the goods or money granted in the contract (Annex IV, para. 1). When details on a person are requested, these include the surname and name, business name, and tax identification number. For non-residents, the nationality (or country of creation of legal entities) must be specified, together with a mention of the country of tax residence, tax identification number and domicile (Annex IV). 101. Second, the resident trustee must annually indicate (i) the name of the trust, country of creation, country of residence, tax identification number and domicile, class or type of trust; (iii) on the settlors and beneficiaries: name, surname, and tax identification number, and for non residents their nationality tax, their domicile and tax identification number; (ii) identification of the
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
institution, or notary public). These cross-checks allow the AFIP to quickly identify inconsistencies. Detected inconsistencies are selected for further auditing depending on the annual guidelines put forward by the Annual Auditing Plan. For instance, during the period between 2009-2011, 41 804 audits have been initiated on the basis of the identified inconsistencies to make a verification of the declared information in the tax returns and the different information regimes established by the AFIP. The system also allows the constitution of groups of interests: the system identifies the other persons to whom a taxpayer is linked, either because they are co-holders of a bank account, shareholders of a same company, or economic partners (using electronic invoicing). 112. Penalties for the failure to respect the obligations set in Law 19.550 are generally of a commercial and civil nature. For instance a company that would be created without respecting the obligations set in the law would be considered as a general partnership, or the transfer of shares not registered are not valid against the company and third parties. 113. Direct sanctions are rather found in the tax laws. First, the omission of filing a tax return is punishable by a fine of ARS 400 (USD 90, EUR 72), and if the situation is not remedied within 15 days, summary proceedings are opened (ss. 38 and 70). 114. Second, the failure to comply (partially or totally) with any of the information statements prescribed by the tax resolutions is sanctioned in accordance with the unnumbered article added after section 38 of the Tax Procedure Law 11.863. Individuals are subject to a fine up to ARS 5 000 (USD 1 115, EUR 894) and entities to a fine up to ARS 10 000 (USD 2 230, EUR 1 790; entities of any kind constituted in the country, or of establishments organised as permanent companies of any nature or object belonging to individuals or legal persons, constituted or located abroad). This applies to the failure to register an entity with the AFIP, to report the transfer of shares or to provide the annual update on the ownership structure of the company or partnership pursuant to the General Resolution 3293 of 22 March 2012, the fideicomisos and foreign trusts under General Resolution 3312. According to the available information, the AFIP has applied 419 027 penalties totalling ARS 2 905 million in the period 2010-2012 (USD 639 million, EUR 523 million). 115. In conclusion, there are enforcement measures and penalties under Argentinas laws to ensure that information required to be maintained is, in fact, maintained. The penalties appear to be proportionate and dissuasive enough to insure compliance. Information received from EOI partner jurisdictions confirms that Argentinas competent authority is able to respond to requests for ownership and identity information for all relevant legal entities and arrangements.
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116. A condition for exchange of information for tax purposes to be effective, is that reliable information, foreseeably relevant to the tax requirements of a requesting jurisdiction is available, or can be made available, in a timely manner. This requires clear rules regarding the maintenance of accounting records. The obligation to maintain reliable accounting records are found mostly in the Commercial Code, Law 19.550 on Commercial Companies and the Tax Procedure Law.
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electronic bookkeeping, overall entries of no longer than a month may be made instead of daily entries, provided the electronic bookkeeping allows the individualisation of the transactions, pursuant to Law No 19.550, s. 61). Alternatively, if the trader keeps a separate cash and invoices book, which is deemed to be part of the Daybook, it can omit to record in the Daybook the detailed records of the amounts received and of the purchases made (Commercial Code, s. 46). 120. Accounting records must also enable the financial position of the entity to be determined with reasonable accuracy and truthfulness, and reflect details of its assets and liabilities. All traders must provide in their Inventory an exact account of the money, movable and immovable property, credits and every other kind of asset which forms their business from the commencement of their business (s. 48). Then, they must produce a general balance of the businesses within the first three months of each year (s. 48, every three years for retail traders). At the end of each year, traders must complete the Inventory and Balances, as well as an accounting statement demonstrating profit and losses (s. 52). 121. All books and records must be kept with clarity, chronologically, and without blank spaces, writing between lines, erasures or amendments (s. 53). It is similarly prohibited to alter or deface any part of the books (s. 54). If these prescriptions are not respected, the accounting books cannot be used by the trader as evidence in commercial courts. The Daybook (unless electronic recording is approved) and the Inventory and Balances must be submitted to the local Registrar of Commerce within the Tribunal of Commerce for authentication and stamping (s. 53). 122. All SAs and SRL with a capital above ARS 10 000 000 need also to add to their financial statement the opinion of an independent auditor (subject to the AML/CFT framework) (IGJ General Resolution 7/2005, ss. 264 and 267). The local Registrars have adopted professional accounting standards issued by the Argentine Federation of Professional Councils in Economic Sciences for the presentation of financial statements. 123. In relation to entities which are authorised to make public offerings of their securities, the Argentinean authorities indicate that from 1 January 2012, such entities must adopt International Financial Reporting Standards, as issued by the International Accounting Standards Board, when preparing their financial statements. The fiduciario of financial fideicomisos is similarly required to prepare financial statements following the same standards as for entities authorised to make public securities offerings, i.e. using IFRS. These financial statements must be submitted to the National Securities Commission (National Securities Commission Regulations, Art. 34, Chapter XV, Book 3).
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
certainty. Where accounting records are so kept, they must be backed up by the corresponding vouchers. As noted above, Decree N 1397/1979, s. 48, establishes that taxpayers or responsible persons must keep their books and records, vouchers and documents which prove the related transactions in tax matters, for a period of up to five years after the fiscal year they refer to is statute barred. Section 39 of the Tax Procedure Law provides for penalties consisting of fines of from ARS 150 to 2500 in case of infringement of these obligations (USD 33 to 560, EUR 27 to 450). 128. In practice, taxpayers that are subject to the VAT system must also use an electronic invoicing system developed by the AFIP, pursuant to the AFIP General Resolution 1415/03, which also obliges these taxpayers to keep the justifying documents of their transactions (s. 36). 129. These various requirements ensure the existence of accounting record keeping obligations of relevant entities including that of retaining supporting documentary evidence for the transactions performed.
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134. Access to banking information is of interest to the tax administration only if the bank has useful and reliable information about its customers identity and the nature and amount of financial transactions. 135. There are 64 banks 52 private banks and 12 state-owned banks (2 of the Nation and 10 of the provinces) supervised by the Central Bank of the Republic of Argentina (BCRA). Banks and other financial institutions maintain identity information on their clients, as noted above, in application of the antimoney laundering law. They also keep full records of their financial transactions.
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139. The AML Law 25.246 indicates that the obligation to collect information on the identity of regular and occasional customers may be omitted when the amounts are lower than a minimum established by circular letter. The FIU Resolution 121/11, s. 18, establishes that except when there is suspicion of Money Laundering and Terrorist Financing, customers who conduct transactions for monthly amounts that do not exceed ARS 40 000 (USD 8 920, EUR 7 150), or its equivalent in other currencies, and are related to salary payment, construction industry workers unemployment funds, or customers who conduct monthly transactions not exceeding ARS 5 000 (USD 1 115, EUR 894), or its equivalent in other currencies, in accounts related to payment of social benefits, information provided by employers and competent national, provincial or municipal agencies shall be sufficient. In the same way, s. 20 establishes that accounts credited with funds from judicial cases shall be exempted from customer identification general requirements 140. The BCRA Compilation of AML measures require banks to keep records of information on transactions in a way to permit their reconstruction.
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
B. Access to Information
Overview
146. A variety of information may be needed in a tax enquiry and jurisdictions should have the authority to obtain all such information. This includes information held by banks and other financial institutions as well as information concerning the ownership of companies or the identity of interest holders in other persons or entities, such as partnerships and trusts, as well as accounting information in respect of all such entities. This section of the report examines whether Argentinas legal and regulatory framework gives the authorities access powers that cover all relevant persons and information and whether rights and safeguards are compatible with effective exchange of information. It also assesses the effectiveness of this framework in practice. 147. The Argentinean authorities have the information for identifying the owners of legal entities on their database, as a result of annual returns filed by taxpayers and periodic statements filed by third parties. The competent authority was able, during the period under review, to give a partial response to 89% of the requests received without resorting to its information gathering powers. 148. The Argentinean authorities make use of their powers available for domestic taxation purposes in order to exchange information. The Argentinean tax administration has broad powers of access to accounting and banking information and to data on the ownership of legal entities, pursuant to the Tax Procedure Law. In particular, these powers allow the authorities to request information from any taxpayer and from third parties who may have the information sought. Banking secrecy is lifted for tax matters. 149. Enforcement measures are available to compel the disclosure of information, but these have never had to be used for EOI purposes. Finally, taxpayers have no right to be notified of the existence of an EOI request or to know that information concerning them has been requested for EOI purposes. 150. This legal framework allows the Argentinean tax authorities to collect the information requested by their partners.
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151. The Argentinean competent authority as identified in its EOI arrangements is the Ministry of Economy. For the purposes of handling EOI requests, the Ministry of Economy delegated its powers to the Federal Administration of Public revenues (AFIP for its acronym in Spanish), and the Administrator Federal nominated four delegated competent authorities (see section C.5). In practice, incoming requests are handled by the EOI Division of the AFIP Directorate of International Taxation. When information is not available in the central tax databases, the EOI Division asks for such information from the tax office of the area in which the person, to whom the EOI request relates, is domiciled. It is therefore the same tax auditors who collect information for EOI and domestic tax purposes. For both purposes, they use the same information gathering powers provided under section 35 of the Tax Procedure Law N 11.683. 152. In practice, Argentina received 21 EOI requests in the period 20092011 concerning 273 persons. No final response was issued with information gathered exclusively from the centralised tax databases; however, 89% were partially answered by the central areas on the basis of the information contained in said databases, and 11% were exclusively dealt with by local tax offices that require the information from taxpayers or third parties. In one instance, an EOI partner asked the competent authority of Argentina to provide information as available in its tax database, without asking for any information from the taxpayer or third parties.
Ownership and identity information (ToR B.1.1) and Accounting records (ToR B.1.2) Legal and regulatory framework
153. Information on the identity and ownership of relevant entities such as companies, partnerships and trusts is maintained in the tax administration database, as a result of the mandatory declarations of information, and annual tax returns made by these entities and third parties. Similarly, the local tax offices maintain annual accounts deposited by commercial entities (see Part A above).
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154. If the competent authority is requested to provide more detailed information or underlying documents, the auditor of the local tax office of the person to whom the EOI request relates may exercise the reporting duty of section 35 of the Tax Procedure Law n11.683 to obtain such information: The AFIP will have ample powers to verify at any time, including with respect to current tax periods, through its officials and employees, the degree with which the persons apply their obligations or responsibility to fulfil the laws, regulations, resolutions and administrative instructions, by examining the situation of any presumed responsible person. 155. The section further indicates some of the actions which the AFIP may perform. Section 35(a) allows the tax administration to summon the signatory of a sworn statement, presumed taxpayer or responsible party, or any third party, which in the judgement of the AFIP were aware of the negotiations or operation of the former, to answer or report orally or in writing all the questions or requirements made to them over income, revenue, outlays, and in general, as to the circumstances and operations which in the opinion of the AFIP were connected to tax matters under the respective laws. In addition, section 35(b) and 35 (c) specify that the information gathering powers of the tax auditors extend to all justifying documents that refer to taxable matters, whether in the hands of the taxpayers or third parties. These broad provisions cover the gathering of both ownership and accounting information.
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Use of information gathering measures absent domestic tax interest (ToR B.1.3)
158. The concept of domestic tax interest describes a situation where a contracting party can only provide information to another contracting party if it has an interest in the requested information for its own tax purposes. 159. The access powers of section 35 of the Tax Procedure Law applicable for both domestic and EOI purposes refer to the degree in which those under an obligation or responsibility fulfil the laws, regulations, resolutions and administrative instructions. Similarly, the tax administration can for instance ask questions connected to tax matters under the respective laws (section 35(a)). This wording may suggest that to use its information gathering power, the tax administration needs to have a domestic interest in doing so. However, the Decree creating the AFIP provides that the powers of the general administrator include the power to directly request and provide cooperation and reports to foreign tax authorities. The power to provide direct co-operation is interpreted as authorising the AFIP to use the information gathering powers of section 35 of the Tax Procedure Law without having an interest in the requested information for Argentinean tax purposes. 160. The Argentinean authorities indicate that the use of section 35 of the Tax Procedure Law has never been challenged by a taxpayer or third party.
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to comply with the requirements of the AFIP agents, thus impeding the AFIP to perform its tasks. If the person persists in this passive resistance, he/she can be fined a second time, even when the previous fines are not yet collected or are being administratively or judicially determined. The amount of the fine is adjusted according to the situation of the taxpayer and the seriousness of the infringement. 163. Pursuant to Decree N 1397/1979, s. 49, failure to provide accounting records and underlying documents to the tax official when so requested constitutes passive resistance.
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Bank secrecy
168. The Financial Entities Law N 21.526, s. 39, imposes a secrecy obligation on banks and other financial entities. Commercial Banks, Investment Banks, Mortgage Banks, Finance Companies, Savings and Loan Associations for Housing or Other Real Property, Credit Unions and other entities performing all usual intermediation between supply and demand for financial resources may not disclose the financial passive transactions they perform. (Passive transactions are those through which financial entities receive financial and monetary funds from their customers for themselves, e.g. current accounts with or without interest.) The Criminal Code sanctions the breach of professional secrecy without just cause by a fine of ARS 1 500 to 9 000, the deprivation of the right to perform the given profession and 6 months to 3 years imprisonment (USD 334 to 2 000, EUR 270 to 1 600; s. 156). 169. However, the Financial Entities Law also provides for exceptions to bank secrecy, when the disclosure of information is required by: i) a judge in a lawsuit; ii) the Central Bank in the exercise of its authority; iii) national, provincial or municipal tax collection agencies, provided the information refers to a specific accountable party, is under a tax audit with respect to that party, and is formally required in advance; and iv) the Tax General Directorate of the AFIP (to which belong the EOI Division and local tax auditors), provided the information is required formally and in advance (i.e. an AFIP official cannot request orally to surrender information immediately). 170. In addition, Law 23.271 was specifically adopted in 1985 for the lifting of bank secrecy for tax purposes: it provides that the bank secrecy established in Law 21.526 (as well as professional secrecy established in Law 17.811 on stock exchange) does not apply to information requested by the AFIP, in fulfilment of its legal functions, from any entity or individual which is subject to these laws. The requested information may have a general or limited scope, and refer to one or more specific or non-specific persons, even if such person(s) is/are not under a tax audit. The law specifies that these are public policy provisions. 171. Finally, under section 107 of the Tax Procedure Law, state and private entities, including banks, are obliged to provide the AFIP with all information requested on themselves as well as on natural and legal persons and documents, facts and rights or goods registered, etc. These entities cannot refuse to provide the information by invoking the provisions of laws, charters, or regulations which govern them. 172. Bank secrecy is therefore clearly lifted for tax purposes, including for answering EOI requests.
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
Confidentiality rules
176. There is no national definition of the attorney-client privilege in Argentina, as the Code of Ethics of attorneys varies depending on each province. However, the essence of the professional secret is the protection of privacy (National Constitution, s. 19 and Civil Code, s. 1071bis) and its violation uniformly sanctioned by the Criminal Code with a fine of ARS 1 500 to 9 000, and where appropriate the deprivation of the right to perform the given profession for 6 months to 3 years (USD 334 to 2000, EUR 270 to 1 600; s. 156).
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
legal entity); the professional who acts as representative will be subject to the same obligation to provide information as the taxpayer under s. 35 of the Tax Procedure Law. Where an accountant or lawyer does not act as representative of a taxpayer, but nevertheless holds information (such as a taxpayers accounting books), and the taxpayer failed to comply with an information request from the tax authority because they fail to request this information from the professional, the tax authority may obtain a search warrant to obtain such information from the premises of the accountant/attorney, and in such case, the relevant professional would not be able to claim professional secrecy to refuse to comply with the search warrant (Tax Procedure Law, s. 35(e)). Argentinean authorities referred to case law to indicate that such a warrant can be obtained by the tax authority even in the context of non-criminal matters 12. Finally, Argentinean authorities indicated that where an accountant has provided services as a third party (as opposed to act as a representative of the taxpayer entity), they will be under a direct obligation, pursuant to s. 35 of the Tax Procedure Law, to comply with information requests by the tax authority in relation to documents which they have prepared, such as provide copies of audited accounts, in the case of an accountant which has acted as an auditor for a company. 182. The Argentinean competent authority and its EOI partners indicate that professional secrecy never caused any problem in practice either in relation to EOI or in relation to domestic tax matters. There are no cases in which the request has been denied or in which, as a result of the information provided, the professional secrecy has been affected. Nevertheless, the impact of this on international exchange of information in practice should be monitored by Argentina on an ongoing basis.
Determination and factors underlying recommendations
Phase 1 determination The element is in place. Phase 2 rating Compliant.
12.
Opal SCA for Search Warrant 09/17/1970, Federal Contentious-Administrative Court, Court I; National Tax Authority DGI for Request of Search Warrant on 12/28/1971, Court II of the Federal Contentious-Administrative Court.
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
when they collect the information from the person concerned, they do not inform him/her of the purpose of the request. 189. The Argentinean competent authority has not experienced practical difficulties with the application of rights and safeguards, nor have its EOI partners reported any difficulties noted in Argentina. No legal challenges of the use of information gathering measures or of an exchange of information have occurred in relation to an EOI case.
Determination and factors underlying recommendations
Phase 1 determination The element is in place. Phase 2 rating Compliant.
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C. Exchanging Information
Overview
190. Jurisdictions generally cannot exchange information for tax purposes unless they have a legal basis or mechanism for doing so. A jurisdictions practical capacity to effectively exchange information relies both on having adequate mechanisms in place as well as an adequate institutional framework. This section of the report assesses Argentinas network of EOI agreements against the standards and the adequacy of its institutional framework to achieve effective exchange of information in practice. 191. Argentina has a network of agreements that provide for exchange of information in tax matters to 52 partner jurisdictions (see annex 2) pursuant to double tax conventions (DTC), tax information exchange agreements (TIEA) and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. The EOI instruments with Bolivia and Switzerland do not meet the standard, and Argentina proposed a TIEA to these jurisdictions to remedy the situation. Some other instruments are awaiting ratification in Argentina and/or in its partner. 192. Argentina continues to expand its EOI network and discussions or negotiations are underway with additional jurisdictions. Comments were sought from Global Forum members in the course of the preparation of this report, and no jurisdiction advised that Argentina had refused to negotiate or conclude such an EOI instrument. However, importantly, Argentina has terminated its DTCs with Chile and Spain, two of its main EOI partners, with effect from 1 January 2013. This entails a de facto termination of the accompanying inter-institutional TIEAs with the respective EOI partners. Whilst Argentina and Spain will be able to exchange information for tax purposes under the Multilateral Convention once it enters into force in both jurisdictions, there will be no EOI mechanism between Argentina and Chile from 2013. Accordingly, element C.2 is determined to be in place, but certain aspects of the legal implementation of the element need improvement.
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197. Argentina can exchange information with 52 jurisdictions on several bases: double tax conventions (DTCs), Tax Information Exchange Agreements (TIEAs), the multilateral instrument, and often a combination of two or three of these instruments. 198. First, Argentina concluded 18 DTCs from 1976 to 2001. Argentina signed its first DTC with Bolivia in 1976, and this treaty contains a limited provision on consultation and information that does not meet the standards (and is not further discussed under this section). 13 As a result, several years
13. The competent authorities of the Contracting States shall consult each other and exchange information as is necessary to resolve, by mutual agreement,
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ago Argentina proposed a Memorandum of Understanding in the form of a TIEA to Bolivia which did not respond as of July 2012. The DTC signed with Switzerland in 1997 does not meet the standard either. First, it does not contain any EOI provision and is not in force. Second, whereas at the time of signature of the DTC some notes verbales were exchanged that ensured the possibility of exchange of information, these cover only exchange for the purpose of carrying out the provisions of the treaty. In any event, this treaty has not been ratified by the Argentina Parliament (but was applied provisionally in 20012012, see Annex 2). Negotiations between the two jurisdictions are ongoing. 199. Importantly, Argentina just terminated in July 2012 its DTCs with Chile and Spain, its two main EOI partners, with effect from 1 January 2013. The DTC with Chile, signed in 1976 and which contains a limited EOI provision, was complemented with a Memorandum of Understanding in the form of a TIEA in 2006. 14 The termination of the DTC entails the de facto termination of the TIEA and there will be no EOI mechanism between Argentina and Chile from 2013. 200. The situation is different with Spain. Although the termination of the DTC also entails the termination of the TIEA signed in 2004, both Argentina and Spain signed the Multilateral Convention and its Protocol. Argentina ratified the Multilateral Convention on 30 May 2012. EOI will be performed pursuant to this instrument as soon as it comes into force in both jurisdictions. The existing instruments are nonetheless analysed below, to assess the exchange of information performed over the last three years with these partners. 201. Second, Argentina concluded 14 TIEAs in 2004-2011, including with some of its existing EOI partners, in order to enhance exchange of information. In addition to the TIEA with Chile and Spain above-mentioned, Argentina also signed a TIEA with Brazil in 2005. These instruments are qualified as inter-agency or inter-institutional agreements in Argentina, as they are Memoranda of Understanding on the application of the EOI provision of the DTCs. Other TIEAs signed by Argentina are qualified as inter-governmental agreements and are equivalent to any international treaties (with all the same legal effects). They may or may not have to be passed by the Parliament,
any difficulty or doubt arising from the application of this Convention and to establish the administrative controls that are necessary to prevent fraud and evasion. The information exchanged according to the preceding paragraph shall be considered as secret and shall not be disclosed to any person other than the authorities that are in charge of the administration of the taxes covered by this Convention. For the purposes of this Article, the competent authorities of the Contracting States may communicate each other directly. The AFIP can sign TIEAs with treaty partners pursuant to section 1(b) of the Resolution 336/2003 of the Ministry of Economy.
14.
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the increase of outgoing requests observed in recent years may trigger more incoming requests with the development of bilateral relationships in practice. 205. In addition to exchanging information upon request, Argentina exchanges information automatically with four partners, and spontaneously, although to a smaller extent (less than 10 in 2011). Some joint audit operations have also taken place with a partner. The amount of information exchanged automatically and spontaneously is expected to increase in the coming years, with new IT tools being developed within the EOI Division of the AFIP. 206. Finally the Argentina tax administration uses the good offices of the Ministry for Foreign Relations to collect information, absent a DTC or TIEA. In some instances, the AFIP requests the Argentinean embassies to locate information in the publicly available databases of the foreign jurisdiction, such as the commercial register, the register of real estate properties, etc.
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is in possession of the information. The TIEA with Jersey also provides for an additional criterion of obtainable by, in addition to the model wording of in the possession of, or in the control of, persons who are within its territorial jurisdiction. The TIEA concluded by Argentina with Guernsey also contains a different wording, as the expression in control of is substituted with the expression obtainable by persons who are within its territorial jurisdiction (in Article 1), and a request for information should only be made only where it is unable to obtain the requested information by other means (Article 5). Interpretive clarifications by Argentinas and Guernseys authorities confirm that the choice of words should not reduce EOI. 214. In practice no issue has arisen in relation to the type of person requested to provide information, except when the person subject to the request was no longer present in the Argentina territory (especially foreigners that came in Argentina to work and had gone back to their country).
Exchange information held by financial institutions, nominees, agents and ownership and identity information (ToR C.1.3)
215. Jurisdictions cannot engage in effective exchange of information if they cannot exchange information held by financial institutions, nominees or persons acting in an agency or a fiduciary capacity. Both the Model Tax Convention and the Model TIEA, which are the authoritative sources of the standards, stipulate that bank secrecy cannot form the basis for declining a request to provide information and that a request for information cannot be declined solely because the information is held by nominees or persons acting in an agency or fiduciary capacity or because the information relates to an ownership interest.
Bank information
216. All inter-governmental TIEAs concluded by Argentina explicitly forbid the requested jurisdiction from declining to supply the information requested solely because it is held by a financial institution, nominee or person acting in an agency or a fiduciary capacity, or because it relates to ownership interests in a person, in conformity with Article 5(4) of the Model TIEA. 217. None of Argentinas DTCs currently in force includes a similar provision (equivalent to Article 26(5) of the Model Tax Convention) as the latest DTC signed by Argentina dates back 2001, at a time when paragraph 5 was not part of the Model DTC (as it was introduced in 2005). However, the absence of this paragraph, in either a DTC or a TIEA, does not automatically create restrictions on exchange of bank information in Argentina. The commentary on Article 26(5) indicates that whilst paragraph 5 represents a change in the structure of the Article, it should not be interpreted
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
222. Argentinas Agreements with Brazil, Chile, Peru and Spain do not use the same wording but nonetheless indicate, in each case, that the requested authority must obtain the information as if it was for its own tax purposes, which excludes a domestic tax interest requirement. 223. In practice, the issue of domestic tax interest has never triggered any issue in EOI, especially as the seven jurisdictions that requested information from Argentina over the last three years do not need to have a domestic tax interest to exchange information (Brazil, Canada, Chile, France, Italy, the Netherlands and Spain). The Argentinean authorities have indicated that, in practice, they exercise reciprocity on this basis; when evaluating their response to an EOI request, the Argentinean authorities will take into account the requesting jurisdictions past refusal to provide information on request to Argentina, based on an absence of domestic interest.
Exchange of information in both civil and criminal tax matters (ToR C.1.6)
226. Information exchange may be requested both for tax administration purposes and for tax prosecution purposes. The international standard is not limited to information exchange in criminal tax matters but extends to information requested for tax administration purposes (also referred to as civil tax matters). 227. All of the EOI articles in DTCs signed by Argentina may be used to obtain information to deal with both civil and criminal tax matters. Some recent DTCs contain the explicit wording of Article 26(1) of the OECD Model Tax Convention, which refers to information foreseeably relevant for carrying out the provisions of this Convention or to the administration and enforcement of the domestic [tax] laws. The TIEAs make express provision to this effect in their article 1. Most DTCs refer more broadly to information necessary for carrying out the provisions of the Convention or of the domestic laws concerning taxes covered by the Convention, without excluding either civil or criminal matters. (The EOI article in a few DTCs specifically
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
234. Argentina has EOI arrangements in force with 28 jurisdictions out of the 52 jurisdictions with which an instrument was signed, most of the gap relating to the Multilateral Convention, which was signed by Argentina in November 2011 and ratified by Argentina on 30 May 2012. Argentina indicated that the ratification instrument will be deposited shortly. The Multilateral Convention will come into force in Argentina after the ratification instrument has been deposited in accordance with the terms of the Convention. 15 235. Only two of the DTCs signed by Argentina are not in force: the DTC with Russia, which Argentina has ratified but not Russia, and the one with Switzerland. The Argentine Parliament has not yet approved the DTC with Switzerland. Through an Additional Protocol dated on 23 November 2000, both Contracting States agreed to provisionally apply the Convention and its Note verbal on exchange of information for carrying out the convention, but Argentina terminated this provisional application on 16 January 2012. 236. In addition, two TIEAs signed by Argentina are not yet in force: The TIEAs with India and Uruguay are in Parliament. 237. It remains that two and a half years lapsed between the signature and the ratification of four TIEAs. It is nonetheless noted that the ratification process of some instruments has been more expeditious, from two to nine months, and it is expected that the Ministry of Foreign Relations and Worship responsible for the promotion of the necessary internal procedures for their entry into force, as well as for notifying the treaty partners of the conclusion of such procedures, will continue to apply reasonable deadlines. 238. Finally, as mentioned in the introduction to section C.1, Argentina terminated its DTCs with Chile and Spain in July 2012, with effect from 1 January 2013.
15.
Article 28(5) of the amended Multilateral Convention states that: this Convention shall enter into force on the first day of the month following the expiration of a period of three months after the date of deposit of the instrument of ratification with one of the Depositaries.
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244. Ultimately, the international standard requires that jurisdictions exchange information with all relevant partners, meaning those partners who are interested in entering into an information exchange arrangement. Agreements cannot be concluded only with counterparties without economic significance. If it appears that a jurisdiction is refusing to enter into agreements or negotiations with partners, in particular ones that have a reasonable expectation of requiring information from that jurisdiction in order to properly administer and enforce its tax laws it may indicate a lack of commitment to implement the standards.
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245. Argentina has a broad network of DTCs and TIEAs covering most of its significant trading partners and investors. In addition, Argentina will be able to exchange information with the United States and Mexico under the Multilateral Convention once this comes into force in the respective jurisdictions. In relation to its other significant trading and investor partners namely, Hong Kong, China; and Singapore Argentina has proposed to negotiate TIEAs with these jurisdictions. Hong Kong, China and Singapore have responded to the request with the intention of negotiating a DTC. 246. However, as noted above, Argentina terminated its DTCs with Chile and Spain very recently, in July 2012, with effect from 1 January 2013. Whereas EOI will be possible with Spain on the basis of the Multilateral Convention once this enters into force in both jurisdictions, the same does not apply to Chile. This situation may have a serious impact on Argentinas ability to effectively exchange information, since the EOI mechanism of Argentina with one of its main EOI partners will soon no longer apply. Further, due to termination of its EOI instrument with Spain, there may be no legal basis for information exchange if by 1 January 2013 the Multilateral Convention has not entered into force in both jurisdictions. 247. Argentina has developed a policy of TIEA negotiation since 2009. The AFIP every year identifies the jurisdictions with which it is of interest to negotiate a TIEA, by taking into account some indicators like their trade operations, financial transactions and international investments, foreign income of residents and withholding taxes on Argentina source income of foreigners, and jurisdictions of no or nominal tax (as listed in section 21.7 of the decree on the Income Tax Act). The AFIP then drew up a list of relevant jurisdictions and invited them to negotiate a TIEA. Argentina was also invited to negotiate TIEAs by other potential partners. As a result, Argentina has signed 12 TIEAs over the last two years and, as of May 2012, Argentina is negotiating TIEAs with other 19 jurisdictions. 248. Argentina signed the Multilateral Convention in November 2011 and ratified this on 30 May 2012. Argentina indicated that the ratification instrument will be deposited shortly. 248. As far as DTCs are concerned, Argentina wishes to protect taxation of income at the source and has not signed any new DTC since 2001. Argentina nonetheless set up in 2011 a Commission in charge of monitoring the implementation of the existing DTCs of Argentina. This Commission is composed of representatives of the Ministry of Economy and Public Finances, of the Ministry of Foreign Relations and Worship, and of the AFIP. 240. In some instances, Argentina invited existing DTCs partners to sign a complementary TIEA, especially where the EOI provision of the DTC does not include an equivalent of paragraphs 4 and 5 of the OECD Model Tax
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C.3. Confidentiality
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received.
252. Governments would not engage in information exchange without the assurance that the information provided would only be used for the purposes permitted under the exchange mechanism and that its confidentiality would be preserved. Information exchange instruments must therefore contain confidentiality provisions that spell out specifically to whom the information can be disclosed and the purposes for which the information can be used. In addition to the protection afforded by the confidentiality provisions of
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information exchange instruments, tax jurisdictions generally impose strict confidentiality requirements on information collected for tax purposes.
Information received: disclosure, use, and safeguards (ToR C.3.1) Exchange of information mechanisms
253. The provisions governing confidentiality are based on Article 26(2) of the Model Tax Convention (in its successive versions, depending on the date of signature of the treaty in question) or on Article 8 of the Model TIEA. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. (Article 26(2) of the Model Tax Convention) 254. The majority of Argentinean treaties, the Multilateral Convention and all the TIEAs provide that the information obtained in the course of a request for assistance shall be accessible only to persons directly concerned with or involved in the assessment of taxes, or the administrative control of that assessment, etc. 16 Only the use of the first term encompasses the taxpayers or their representatives. However, the Spanish versions of the instruments indistinctly refer to the persons charged with tax duties (las personas encargadas de la gestin o recaudacin de los impuestos). The Argentinean authorities indicate that their treaties follow the official translation of the Model DTC, which does not make a difference between the two English terms. However, the Argentina authorities explain that the adjective encargadas, used in the Spanish versions of the DTCs concluded by Argentina, is both applicable to the persons and authorities, and it means in charge of or responsible for, thus it would not have the same scope as the English expressions concerned with or involved. As a result, information cannot be communicated
16.
The TIEA with The Bahamas also indicates that where information provided for a criminal tax purpose is subsequently to be used for a non-criminal tax purpose, and vice versa, the requested jurisdiction shall be notified of this change in use, if not before, then within a reasonable time of the change in use occurring. This does not alter the application of the standard.
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
Argentinean legislation
259. The maintenance of secrecy in the Contracting State receiving information is a matter of domestic laws (whether it is the requested or the requesting jurisdiction). Sanctions for the violation of such secrecy in that State are governed by the administrative and penal laws of that State. 260. Argentinas domestic legislation contains relevant confidentiality provisions under section 101 of the Tax Procedure Law: the statements, information and returns that persons concerned or third persons submit to the AFIP are secret, and the AFIP officials have the obligation to keep the information that they are aware of because of their functions absolutely secret, and cannot communicate it to anyone, even with the consent of the person concerned, except to their hierarchical superior. An infringement to this secrecy duty is a criminal offence punishable by imprisonment from a month to two years and exclusion from office for one to four years, pursuant to section 157 of the Penal Code. The same sanction applies to third parties who reveal or reproduce this information. 261. DTCs and the Multilateral Convention are above Argentinean laws and therefore the disclosure of information pursuant to an EOI request does not constitute an offence. In addition, for TIEAs which are not above laws, section 101 of the Tax Procedure Law expressly lifts the secrecy duty of AFIP officials for EOI purposes. Disposition 98/2009 of the AFIP confirms that the AFIP is exempt from the tax secrecy duty as regards the information sent abroad in compliance with a DTC or a TIEA. The Tax Procedure Law further includes a provision requiring the AFIP officials to receive a commitment from the recipient foreign tax authority to respect the confidentiality of the information transmitted, in the same conditions as those expressed in Article 26(2) of the Model DTC. Other exceptions cover courts and prosecutors office, the FIU, etc. that conform to the standard.
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
267. The international standard allows requested parties not to supply information in response to a request in certain identified situations where an issue of trade, business or other legitimate secret arises.
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
276. Pursuant to the Agreements with Chile and Spain (which complement the respective DTCs) and Peru, the requested party should answer within 6 months of the request, unless the difficulty of answering the request justifies an additional 2 months. When it appears impossible to answer the request within this deadline or because of difficulties in gathering the information, the requested jurisdiction should inform the requesting jurisdiction and indicate a possible date for the answer or explain the nature of the difficulties. Finally, any refusal to answer an EOI request must be made within 3 months. 277. Some other TIEAs are less specific: the TIEAs with the Bahamas, Guernsey and Jersey provide that the requested authority shall acknowledge receipt of a request to the requesting authority, shall advise if there are any unexpected delays in obtaining the requested information, and shall use its best endeavours to forward the requested information to the applicant party with the least possible delay. The variety of deadlines set in various instruments might be difficult to follow by the Argentinean competent authority. It is invited to carefully monitor the implementation of these deadlines.
Practice
278. In practice, since the end of 2011 the competent authority sends acknowledgements of receipts via emails when an email address is provided by the requesting authority. It also quickly informs the requesting authority once the person subject to the request is identified. The EOI database now also sends alert messages to the persons in charge of the system, when a request is not fully answered within 90 days. This person then informs the Director of International Taxation. However, these changes are too recent for peers to yet notice a difference of practice. 279. The General instruction on the processing and management of EOI requests did not specify any general deadline for response to the field tax officers or to the EOI Division. It simply indicated that the Directorate of International Taxation, according to the particular case and in order to ensure a timely fulfilment, shall fix a maximum timeline for the providing field office to proceed with the transmission of the relevant total or partial details and/or background information requested. The practice was then to use the deadlines set for sending reminders to EOI partners that would not answer Argentinean requests, i.e. 3 months where the information is internally available and 6 months when diligences must be conducted to collect the information. 280. These internal deadlines appear quite long and disproportionate for simple requests. The General instruction has therefore been modified: as of May 2012, the local tax office has now 60 days to provide the requested information to the EOI Division and is invited to use all means at its disposal to quickly produce complete information. As an exception, when it is not
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
Resources
287. Since 2010, EOI is managed in practice by the Exchange of Tax Information Division of the AFIP, composed of six officials and the head of Division. The officials have been recruited recently from all over the offices of the AFIP in Argentina and followed training seminars dedicated to exchange of information as well as courses on practical cases. It is also expected that new agents will be hired in the medium term. The EOI Division can also request assistance from the agents of the Division on Assistance in International Taxation, which belongs to the same Department, and who are experts in transfer pricing and abuses of DTCs for instance.
17. Resolution 336/2003 of the Ministry of Economy and Production concerning the implementation of DTCs; Decree 618/97 for TIEAs; AFIP Disposition 258/10 of 15 July 2010.
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Organisational process
292. The typical routine of an incoming EOI request is schematised in Annex 5. Typically: One of the four delegated competent authorities receives the EOI request, and sends it to the EOI Division, which sends it for
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translation into Spanish when another language is used and registers the request in its internal EOI database (one file is opened for each person covered in the request). Each of the requests is individualised by a case number according to the country, year of request and type of exchange (upon request, automatic or spontaneous). An officer of the EOI Division then analyses the validity of the request: competence of the signatory of the request, existence of an EOI instrument, basic requirements in the treaty (e.g. fishing expeditions, reciprocity where appropriate). If the request is considered invalid, the treaty partner is informed immediately, but that has not yet happened since the creation of the Division. If the officer has some doubts on the validity of the request or uncertainties on its scope, he/she can ask for clarifications from the requesting jurisdiction (this has occurred in practice). If the request is considered as valid, an acknowledgement is sent to the requesting authority, together with a request for clarifications or more information where necessary. This step is registered in the EOI database. Three possibilities arise at this stage: (i) all the information requested is available in e-fisco and the officer of the EOI Division gathers the information; (ii) only part of the information is available in e-fisco; and (iii) none of the information requested is available in the central database (e.g. contracts or invoices not scanned in e-fisco). In the first two cases, the officer constructs a complete or partial answer and submits it to a three-level hierarchical review. In the second and third case, the officer simultaneously requests the field office, which has competence in relation to the person who is the subject of the request, for the missing information. If a request relates to several persons with differing locations of domicile, the requests are sent separately to the corresponding regional tax offices. This step is also now entered in the EOI database and an alert system is in place which allows monitoring the compliance with the 60-day deadline. When the missing information is received from the field offices, the EOI officer checks the documents received (its completeness, consistency with information in e-fisco) and constructs an answer for hierarchical review by the head of Division, head of Department and Director (which takes three days in average). The answer is then sent to the requesting authority. Argentina always officially answers in Spanish, and may attach a non-signed English translation when requested.
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PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
Phase 2 rating Partially Compliant. Factors underlying recommendations Although some progress is noticed for the last year under review, Argentinas competent authority has in many instances been unable to answer incoming requests in a timely manner. Argentinas domestic procedures for handling EOI requests, in particular the long internal timelines allocated for responding to requests until May 2012, appears to have inhibited expedient responses to EOI requests. The new deadline of 60 days for regional tax offices to answer requests from the AFIP EOI Division has not been implemented yet. Argentina did not always provide an update or status report to its EOI partners within 90 days in the event that it was unable to provide a substantive response within that time. The structure of the competent authority and management of EOI requests has drastically changed since 2010, and specific responsibilities and working procedures have been introduced. Recommendations Argentina should ensure that the new internal deadlines are respected to enable it to respond to EOI requests in a timely manner, and consider further what measures could be taken to shorten the response time.
Argentina should ensure that the new system put in place to provide updates to EOI partners after 90 days in those cases where it is not possible to provide a complete response within that timeframe operates effectively. Argentina should monitor the implementation of the General Instruction on the processing and management of EOI requests, and of the internal processes of the EOI Division as practice develops, and improve them as necessary.
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Determination/rating
Recommendations
Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1) Phase 1 determination: the element is in place Phase 2 rating: Compliant. Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2) Phase 1 determination: the element is in place Phase 2 rating: Compliant. Banking information should be available for all account-holders. (ToR A.3) Phase 1 determination: the element is in place Phase 2 rating: Compliant.
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
Determination/rating
Recommendations
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1) Phase 1 determination: the element is in place. Phase 2 rating: Compliant. The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2) Phase 1 determination: the element is in place Phase 2 rating: Compliant. Exchange of information mechanisms should allow for effective exchange of information. (ToR C.1) Phase 1 determination: the element is in place Phase 2 rating: Compliant. The jurisdictions network of information exchange mechanisms should cover all relevant partners. (ToR C.2) Phase 1 determination: the element is in place, but certain aspects of the legal implementation of the element need improvement Phase 2 rating: Largely Compliant. The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3) Argentina will have no EOI instrument with Chile, one of its main EOI partners from January 2013. Argentina should sign an EOI instrument with Chile as soon as possible. Argentina should continue to develop its EOI network with all relevant partners.
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Recommendations
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4) Phase 1 determination: the element is in place Phase 2 rating: Compliant. The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5) Phase 1 determination: This element involves issues of practice that are assessed in the Phase 2 review. Accordingly no Phase 1 determination has been made.
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Recommendations Argentina should ensure that the new internal deadlines are respected to enable it to respond to EOI requests in a timely manner, and consider further what measures could be taken to shorten the response time.
Argentina should ensure that the new system put in place to provide updates to EOI partners after 90 days in those cases where it is not possible to provide a complete response within that timeframe operates effectively. Argentina should monitor the implementation of the General Instruction on the processing and management of EOI requests, and of the internal processes of the EOI Division as practice develops, and improve them as necessary.
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ANNEXES 89
Argentina would like to express its gratitude to the Secretariat of the Global Forum and the Assessment Team for all the hard work they have done with the report. We really appreciate the excellent predisposition and feedback, and the constructive way in which the review was carried on. This constructive process helped us to introduce and implement during the last years systemic, regulatory and structural reforms in our system. Especially those that allow us to provide final responses in a timely manner or, if that is not possible, an updated status of the request received. In relation to our network of agreements we consider important to mention the following recent developments: Multilateral Convention: the instrument of ratification was deposited with the OECD on September 13th and the Convention entered into force in Argentina on January 1st, 2013. Tax Agreement with India effective date: January 28th, 2013 (published in the Official Gazette on January 18th, 2013). It is important to mention that the network of partners for information exchanges continues to grow, including South Africa (signature: August 2nd, 2013), Macedonia (April 26th, 2013), Azerbaijan (December 17th, 2012), Aruba (September 30th, 2013), and the Isle of Man (December 14th, 2012), by means of bilateral agreements. In addition, the texts of the agreements with the Virgin Islands and Jamaica were initialed. The DTA signed with the Russian Federation entered into force on October 16th, 2012. By other hand, it is worth mentioning that we have signed a new DTA with Spain, with retroactive effect to January 1st, 2013, and which contains the updated version of Article 26.
18.
This Annex presents the jurisdictions response to the review report and shall not be deemed to represent the Global Forums views.
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90 ANNEXES
Negotiations with Chile were initiated in order to sign a new TIEA; in addition, there are also negotiations for the signature of a DTA with that country.
With regard to the 60-day compliance standard established for the collection of information by the operational areas, this is permanently monitored with an alert system allowing the possibility of registering a complaint with the responsible operational area and, when it is necessary, provide the information to the counterparty or give a report regarding the status of the proceedings. Such system allows to check in due time and proper form the terms and the status of each request. Other measure implemented to provide a response within the terms established is the implementation of new information regimes, in some cases contemporary with the time the events took place (within 10 days) and even anticipated, identifying non resident subjects in a more precise and broad way. Such measures were introduced by the following AFIPs General Resolutions: N 3421 Annex VII (trading derivatives) and VIII (income and investment in the country by non resident subjects) ; N 1122, Section 6 (digital signature) ; N 3417 (advance affidavit on service imports) and N 3276 (advance affidavit on foreign payments). Since 2012, we acknowledge receipt of all information requests and, if it is necessary, we provide with a status update of the request (by emails to the corresponding Competent Authorities of the counterparties). As a result of all the measures exposed in this follow-up, the response terms decreases considerably over time, observing that in 2012 and 2013 are very short or are under the terms recommended in your review, as it was informed to the Global Forum.
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ANNEXES 91
Multilateral agreement
295. Argentina signed the amended Convention on Mutual Administrative Assistance in Tax Matters (the Multilateral Convention), which is currently in force in the case of 15 parties: Denmark, Finland, France, Georgia, Iceland, India, Italy, Korea, Mexico, Moldova, Norway, Poland, Slovenia, Sweden and the United Kingdom. The Protocol amending this Convention or the amended convention has been signed by 38 jurisdictions, including Argentina. The initial Multilateral Convention is also in force with respect to 6 jurisdictions (which are not parties to the protocol): Azerbaijan, Belgium, the Netherlands, Spain, the Ukraine, and the United States. The chart of signatures and ratification of the Multilateral Convention is available at www.oecd.org/documen t/14/0,3746,en_2649_33767_2489998_1_1_1_1,00.html.
Bilateral agreements
296. The table below contains the list of information exchange agreements (TIEA) and tax treaties (DTC) signed by Argentina as of August 2012. For jurisdictions with which Argentina has several agreements, a reference to the multilateral agreement is placed in parentheses (multilateral). The text of the DTCs and TIEAs is available on the website of the Argentinean Tax Administration (in Spanish). When the date of signature is followed by a date in parentheses, the latter refers to the signature of the agreement, while the former refers to the signature of the protocol.
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92 ANNEXES
Type of EoI arrangement Inter-governmental TIEA DTC multilateral 3 Azerbaijan Multilateral
Date in force 15 June 2012 31 December 1999 In force in Australia non amended Convention in force in Azerbaijan 27 July 2012 21 July 1999 non amended Convention in force in Belgium 14 October 2011 4 June 1979 1 January 1983 22 April 2005 30 December 1994 31 August 2012 19 December 1985 terminated from 1 January 2013 25 October 2006 16 September 2011
4 5
Bahamas Belgium
6 7 8
22 August 2011 30 October 1976 17 May 1980 21 April 2005 signed 29 April 1993 signed 18 October 2011 13 November 1976
9 10 11
Inter-agency TIEA 12 13 14 China Colombia Costa Rica Inter-governmental TIEA Multilateral Inter-governmental TIEA multilateral
12 July 2012
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ANNEXES 93
Date signed 12 December 1995 23 May 2011 13 December 1994 4 April 1979 signed 13 July 1978 signed signed 28 July 2011 signed 21 November 2011 3 November 2011 3 November 2011 15 November 1979 signed 28 July 2011 13 October 2009
Date in force 3 September 1997 in force in Denmark 24 May 2011 5 December 1996 in force in Finland 1 March 1981 in force in France in force in Georgia 25 November 1979
16 17 18 19 21
Inter-agency TIEA DTC multilateral DTC multilateral multilateral multilateral DTC multilateral Multilateral Inter-governmental TIEA multilateral Inter-governmental TIEA multilateral multilateral multilateral DTC multilateral multilateral Inter-governmental TIEA multilateral multilateral multilateral Inter-governmental TIEA
20 Georgia
4 January 2012 in force in Iceland Not yet in force in force in India Ratified by Argentina on 30 May 2012 Ratified by Argentina on 30 May 2012 15 December 1983 in force in Italy 9 December 2011 in force in Korea in force in Mexico in force in Moldova 8 August 2010
25 India
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94 ANNEXES
Type of EoI arrangement DTC multilateral
Date in force 11 February 1998 Non-amended Convention in force in the Netherlands 30 December 2001 in force in Norway 8 October 2004 in force in Poland DTC ratified by Argentina 16 June 2012 in force in Slovenia 28 July 1994 terminated from 1 January 2013 1 June 2004 terminated from 1 January 2013 Non amended Convention in force in Spain 10 May 1997 in force in Sweden Not in force (1 January 2001 16 January 2012)
36 Norway 37 Peru
8 October 1997 7 October 2004 signed 10 October 2001 signed 7 December 2009 signed 21 July 1992
41 42
Inter-agency TIEA
7 May 2004
multilateral
(protocol signed)
45 Sweden 46 Switzerland *
*The Argentine Parliament has not yet approved the Convention with Switzerland. Through an Additional Protocol dated on 23 November 2000, both Contracting States agreed to provisionally apply the Convention and its Protocols from 1 January 2001, till 16 January 2012 (date of cessation of the provisional application). Even though exchange of information is not covered in the Convention, it has been instrumented by both Contracting States through the exchange of notes verbales.
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ANNEXES 95
Date in force in force in Turkey non amended multilateral in force in Ukraine 1 August 1997 multilateral in force in the UK non amended multilateral in force in the US Ratified by Argentina on 9 August 2012
50 United Kingdom
DTC multilateral
51
United States
multilateral
52
Uruguay
TIEA
23 April 2012
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
96 ANNEXES
Company Laws
Civil Code Law 19.550 on Commercial Companies Law 12.962 on Mixed Economy Companies Law 21.526 on Financial Entities Law N 24.587 on the individualisation of private securities Law 24.441 on Fideicomisos Law 19.836 on Foundations IGJ General Resolution 7/05
Tax matters
Income Tax Law Tax Procedure Law (11.683) AFIP General Resolutions, including GR n3312 on a regime of information and registration of the operations of Argentinean fideicomisos and foreign trusts, and GR n3293 on electronic declarations Law 26.047 and Law 20.628 on Profits Tax
Other matters
Criminal Code Laws 17.811, 20.705, 22.315 Anti-Money Laundering Law 25.246 and FIU resolutions
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
ANNEXES 97
The assessment team met with representatives of the following entities: Federal Administration of Public Revenue (Administracin Federal de Ingresos Pblicos or AFIP) Ministry of Finance Superintendence of Corporations (IGJ) Argentine Federation of Professional Councils of Economic Sciences Central Bank of the Argentine Republic National Securities Commission
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
98 ANNEXES
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT ARGENTINA OECD 2013
OECD PUBLISHING, 2, rue Andr-Pascal, 75775 PARIS CEDEX 16 (23 2013 44 1 P) ISBN 978-92-64-20549-9 No. 60993 2013
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