Argentine Tax Authority Regulated further Aspects on Taxes on Bets

I- Introduction

On December 27, 2016, Law No 27,346 (the "Law") was published in the Official Gazette of the Republic of Argentina introducing several changes to the Argentine tax regime. In addition, the Law introduced two new taxes: (i) a specific tax on bets; and (ii) an indirect tax over online betting.

Decree No. 179, issued on March 15, 2017, together with Resolution No. 4036-E/2017 issued by the Federal Tax Authority clarified certain complementary aspects to the Law and regulated some other aspects regarding the procedure to be carried out for the determination and payment of the tax over bets. For further information, please refer to "Application and Determination of Taxes on Bets".

In this sense, on June 13, 2017, the Federal Tax Authority’s Resolution No. 4007-E/2017 (the “Resolution”) was published in the Official Gazette. The Resolution elaborates on other subjects related to the procedure, especially to the determination for the calculation and payment of the tax, applicable as of the day of its publication.

II- Principal aspects

The Resolution establishes that individuals and entities to which this tax is applicable must use the “Legal Entities Returns” and “Individuals Returns – Personal Assets Tax” software applicative, as applicable, in force at that time, for the preparation of the respective tax return.

However, taxpayers must show through the corresponding working papers the difference resulting from the application of a forty one and fifty percent (41.50%) tax rate over the net returns on exploitation of gambling activities, compared to the returns obtained by exploitation of the rest of the activities which may be carried out by the taxpayer.

To this end, only expenses arising from exploitation of gambling activities should be deducted from returns over exploitation of said activities. The working papers should be made available to the Federal Tax Authority in case they further request them.

Any difference that arises from the mentioned calculation should be paid by electronic transfer of funds.

This means that taxpayers must discern between the earnings and expenses of the activities they carry out in such a way that allows them to allocate the 41.50% tax rate only to earnings that correspond to exploitation of gambling activities. Meanwhile, they will maintain the usual tax treatment for the rest of the activities at the normal tax rate of 35%.