The Federal Tax Bureau created two new installment payment plans

General Resolution No 1966 sets forth a plan for taxpayers in economic and/or financial difficulties and General Resolution No 1967 sets forth a plan to pay liabilities due prior to August 31, 2005.

The highlights of these two plans are summarized below:

Which liabilities are included? Several liabilities may be included, such as: (i) tax liabilities; (ii) social security liabilities; (iii) fines and supplementary charges imposed by the customs services; (iv) liabilities derived from withholding regimes (retenciones y percepciones); and (v) interest, charges and fines derived from any of the above mentioned liabilities.

They may also enclose liabilities included in prior plans, such as the “Financing Assistance Regime” (Régimen de Asistencia Financera - RAF), in the “Extended Financing Assistance Regime” (Régimen de Asistencia Financiera Ampliada - RAFA) and in the “Over Extended Financing Assistance Regime” (Régimen de Asistencia Financiera Ampliada (RAFA) extendido). Furthermore, liabilities being administratively and/or judicially contested may be included, provided that the taxpayer unconditionally accepts the tax authority’s assessment.

Which debts are excluded? Some liabilities may not be included, depending on the plan, such as: (i) withholdings related to the social security regime, except for personal contributions of employees under a labor relation (relación de dependencia); (ii) advance payments and/or payments on account of liabilities; (iii) value added tax for services rendered abroad; (iv) tax and social security contributions regarding taxpayers included in the simplified regime (monotributo); (v) payments made to Insurers of Work Risks (aseguradoras de riesgos de trabajo – ART); and (vi) tax liabilities arising from expenses incurred without proper documentation (impuesto a la salida no documentada).

Please be advised that taxpayers formally charged for misconducts contemplated in the Customs Code (Código Aduanero) and in the Tax Penal Law (Ley Penal Tributaria) cannot apply to these plans.

What are the conditions? The plan established by General Resolution No 1966 is permanent. On the other hand, application to the plan established by General Resolution No 1967 can be filed until June 30, 2006. Application to both plans shall be made electronically through the web site of the Federal Tax Bureau (“AFIP”).

Depending on the liability’s cause, the plan allows to pay in 3, 6, 12, 24, 36 or 48 monthly, equal and consecutive installments, with a monthly interest of 1%, 1.25% or 1.50%.

Which is the consequence for the lack of payment of the installments? In both plans, the lack of payment of a certain number of installments (2, 3 or 4), depending on the total installments of the plan, will cause its termination. Should this be the case, the AFIP will be entitled to initiate legal actions to collect.

What happens with the liabilities being administratively or judicially contested? Both plans foresee that that the taxpayers must unconditionally accept the assessed liability. Furthermore it also sets forth that the tax authority must require the cancellation of precautionary measures, if any.

What are the benefits of the Regime? The most important benefits, for both plans, are: (i) a refund of 30% of the interest paid, provided the taxpayer duly complies with all the installments and formal obligations assumed under the plans; (ii) the taxpayer is entitled obtain the “Tax Certificate to Contract” (Certificado Fiscal para Contratar) which enables taxpayers to enter into agreements with the Argentine Administration; and (iii) the taxpayer is allowed to benefit from the reduction of the contributions of the National Social Security Regime, in accordance with General Resolution No 4158.