Exploited Rural Land Fiscal Registry

1. Introduction

In 2006, the Argentine Tax Authority (“AFIP”) established an information regime called the “Real Estate Operations Registry” for subjects who leased or rented five or more properties on their own account or when the consideration for those leases or rents exceeded a given amount had to be registered.

General Resolution No. 2820/2010 then established the obligation to register those subjects who leased or assigned over 30 hectares in that registry.

It was later informed that there was no obligation to report the agreement in those cases when the lessor issued electronic invoices.

Finally, the “Real Estate Operations Registry” was revoked by General Resolution No. 4096/2017 (the “Resolution”) which, in turn, created the “Exploited Rural Land Fiscal Registry” (the “Registry”).
 

2. Main aspects

1. The Registry

The Resolution sets forth requirements, forms and conditions that will need to be met by those who exploit rural lands, whether by their own means or through third parties, for their registration in the Registry.

The registration of said subjects, as well as the registration of the agreements executed by the exploitation of the lands, will be required for the application of the withholding regime for income tax.

Owners or those who have a right of usufruct over rural lands in Argentina when the activity carried out there consists of farming of grains or seeds, cereal and oilseeds, dried fruit, beans, peas and lentils must register  with the Registry.

Amongst the obligated persons, (a) natural persons, (b) legal entities, undivided estate, companies, trusts, condominium, associations or entities of any kind that are incorporated in Argentina; and (c) permanent establishments organized as permanent companies owned by foreign persons or entities are all subject to these obligations.

When the rural lands belong to foreign residents, registration must be carried out by their legal representative in Argentina.

To carry out the registration before the Registry, the subjects or their representatives must have a Security Level 3 Tax Code and report the domiciles of the establishments to the Registry System.

Registration with the Registry will involve two stages, the first is the registration of the domicile and the second stage is the registration of the activity.
 

1. Registration of Domicile

The person must request the application for the registration of the domicile of the rural land with the Registry under “Registration of Domicile – Application” and select one of the establishments that were previously reported to the Registry System. Additionally, the person must electronically submit the property deed and the last due payment bill for the provincial real estate tax over said property in pdf format.

Once the registration is admitted by the Registry, the system will issue a record of registration of domicile and/or registration record, as applicable.

When the ownership of the lands is in more than one person’s name, the request of registration of the domicile will have to be initiated by any of the owners and, later, a second owner must accept or reject the request. The request will be automatically rejected 30 days after it was initiated.

2. Registration of activity

The responsible subjects must submit the information regarding the exploitation that will be carried out in the land to the Registry.

When the lands are to be exploited by the owners, once the information is submitted, the system will issue a “Proof of registration of exploited rural lands”, which will contain a registration code. In shared ownership, the registration request for the activity must be initiated by any owner and, within the next 30 days, it must be accepted or rejected by a second owner. After said term elapses, the request will be automatically rejected.

Where the land is to be exploited by third parties, the application to inform the activity to be carried out can be initiated by the owners or by the exploiters indistinctly. A pdf. copy of the exploitation agreement must also be filed electronically. If said transaction is admitted, the system will issue proof that the registration of exploited rural lands is “in the process of acceptance”, which will be finalized once it is accepted by the other party to the exploitation agreement.

It must be noted that, in those cases when the counterparty is more than one person, the acceptance of at least two members will be required.

This same procedure will be applied in the case of subcontracted rural lands, in which case any of the involved parties will be able to report the activity to be carried out.

If there are any modifications to the registered information or the agreement is revoked said situation must be informed to the Registry by the owners or exploiters, indistinctly, before the last day of the month immediately after said situation occurs. To that end, the original registration code issued by the system must be entered, and the counterparty will have to accept the modifications made.

The system will not allow a new electronic transaction when there is a pending request by the counterparty of a same agreement.

2. Withholding regime

Withholding subjects for Income Tax must verify the existence of the Proof of registration of exploited rural lands and of the registration code that is applicable to the agreement that motivated the payment.

If said proof and registration code do not exist, to determine the amount to be withheld, the largest of the tax rates must be applied as applicable to the type of transaction, notwithstanding the amount not subject to withholding.

AFIP General Resolution No. 830/2000 rulings will also be applicable to unregulated aspects as long as they do not contradict the Resolution.

The Resolution states that a breach of obligations will be penalized by the sanctions set forth in Tax Procedural Law No. 11,683.

The Resolution entered into force as of its publication in the Official Gazette and its effects are applicable as of August 1, 2017, except for its transitional provisions that will have effect  90 days after  publication date.