Stamp Tax: ARBA Ratifies Increased Tax Rates Not Applicable after January 1, 2016

1. The background leading to Report 5

The Province of Buenos Aires’ Tax Law No. 14,394 (Ley Impositiva), applicable through fiscal year 2013, modified Section 126 of the Tax Code’s Section 289.  As amended Section 289 provides that: “[i]f the value subject to the tax is set in foreign currency, tax must be paid on Argentine currency at the Selling Exchange Rate existing on the end of the business day prior to the date of the act, registered and/or published by the Banco de la Nación Argentina, corresponding to the nature of the operation being taxed and applying the increased tax rates established by the Tax Law for the cases comprehended by this Section.

Section 52 of Law No. 14,394 stated that “[t]ax rates provided by the previous Section will be increased by twenty percent (20%) when the value of the act, contract or operation taxed, is expressed totally or partially in foreign currency.”

Sections 126 and 52 of Law No. 14,394 came into force as of January 1, 2013.  Since then, if an act or contract subject to Stamp Tax was negotiated in foreign currency, then the applicable tax rate was increased by 20%.

This tax rate increase was also taken into account by Sections 52 of Tax Law No. 14,553 and No. 14,653, in force during fiscal years 2014 and 2015, respectively.

Notwithstanding the fact that Section 289 of the Tax Code is still in force, Tax Laws No. 14,808 and 14,880 in force during fiscal years 2016 and 2017, respectively, did not have a similar provision to that stated by the aforementioned Sections 52.

This situation caused a certain degree of uncertainty, since ARBA may deem the increased tax rates set in Section 52 Laws Ns. 14,653 were also applicable to acts and contracts subject to Stamp Tax executed as of January 1, 2016.  Even though in principle provisions contained in Tax Laws are effective for the fiscal years these laws are intended to regulate, in the past ARBA interpreted that increased Turnover Tax rates for certain activities were meant to last.

ARBA considered that even though increased rates arose from an amendment to a Tax Law (Law No. 12,576 applicable for fiscal year 2001 was amended by means of Law No. 12,727 in force as of July 25, 2001) and the fact that they were not considered in Tax Law No. 12,879 for fiscal year 2002, they were also applicable during fiscal year 2002.  ARBA’s criterion, however unreasonable, was ratified by means of full meeting ruling No. 24 (Acuerdo Plenario N° 24) passed by the Province of Buenos Aires’ Tax Court on November 17, 2009.

Report 5 brings light to the existing state of uncertainty.  ARBA expressed increased Stamp Tax rates provided for in Section 52 of Law No. 14,394 and Section 52 of Laws No. 14,553 and 14,653 for acts or contracts subject to Stamp Tax that were negotiated in foreign currency do not apply as of January 1, 2016.
 

2. The grounds of Report 5

After analyzing Section 52 of Laws No. 14,394, 14,553 and 14,653, ARBA mentions that Law No. 14,808 does not consider a similar provision.  ARBA emphasizes the fact that Law No. 14,808 has been in force as from January 1, 2016 as stated in Section 106.

Regarding whether the increased Stamp Tax rates were in force or not as of January 1, 2016, ARBA considered Law No. 14,808’s lack of provision mentioned in the previous paragraph alongside its grounds, that stated “[r]egarding Stamp Tax, it is proposed to abrogate the 20% increased tax rate for acts, contracts and operations whose value is determined totally, or partially in foreign currency is made, in order to unify their tax treatment.”  As per these circumstances, ARBA concludes that the increment in Stamp Tax rates established in Section 52 of Laws No. 14,393, 14,553 and 14,653 is no longer in force as from January 1, 2016.
 

3. Conclusion

It is our understanding that the criterion adopted by means of Report 5 is legally accurate. Pursuant to the different criterion adopted in the past by ARBA, however unreasonable, Report 5 sheds light on the state of uncertainty existing in this matter.