Exchange of Tax Information Treaty between Argentina and the USA

1. Introduction

For the past few years, Argentina has been an active participant in the progress of the exchange of international tax information.

In the meantime, the United States implemented the “Foreign Account Tax Compliance Act” ("FATCA"), by which it obtains information from financial institutions and other entities about nationals from their country around the world. The information is obtained periodically without the need for any investigation pursued by the United States Treasury.

Notwithstanding, Argentina and the United States had not signed  a bilateral information exchange treaty or a treaty to avoid double taxation.

This situation was reversed on December 23, 2016, when both countries signed the exchange of information agreement (“Exchange”), the first in this area. The main aspects will be outlined below.

On October 13, 2017, Argentina notified the United States about the conclusion of the fulfillment of the internal requirements needed for the entry into force of the Exchange.

2. The Exchange

a. General aspects

The main purpose of the Exchange is information that is foreseeably relevant for the determination, assessment and collection of taxes, the recovery and enforcement of tax claims, as well as the investigation or prosecution of tax matters.

The information to be exchanged must comprehend all federal taxes in the case of the United States, and all national taxes administered by the Federal Administration of Public Revenue in the case of Argentina, including any identical or substantially similar taxes that are imposed in either one or the other Contracting State, after the date of signature of this agreement. Notwithstanding, the competent authorities of the Contracting States must notify each other of any significant changes that have been made in their taxation laws that may influence the Exchange.

The Exchange is initially ‘‘upon request’’. Despite that fact, the information may be provided without regard to whether the requested party needs such information for its own tax purposes or whether the conduct being investigated would constitute a crime under the laws of such party.

The information to be exchanged includes:

1. Information held by banks, other financial institutions, and any person acting in an agency or fiduciary capacity including nominee and trustee; and
2. Information regarding the ownership of companies, partnerships, trust, foundations, and other entities, including ownership information on all such settlors, trustees, and beneficiaries, and in the case of foundations, information on founders, members of the foundation council and beneficiaries. The unique exception is listed companies.

We understand that the agreement includes several important aspects and it would allow obtaining a diverse range of information, whereby the local tax office could achieve an efficient control over the tax payments for the assets being held in the exterior; it may also become an efficient way of obtaining relevant proof for administrative proceedings in course. However, and in the interest of trying to  avoid “fishing expeditions”, compliance guidelines are designed for the exchange, regardless of which party is the requested party, with clear instructions to provide the information with the greatest degree of specificity possible. Among those, the following stand out:

1. The identity of the person or ascertainable group or category of persons under examination or investigation;
2. The period of time with respect to which information is requested;
3. The matter under the applicant Party´s tax law with respect to the information that is sought;
4. Grounds for believing that the information requested is foreseeably relevant to tax administration or enforcement of the applicant Party with respect to the corresponding person or group or category of persons requested;
5. Grounds for believing that the information requested is held in the requested Party or is in the possession or control of a person within the jurisdiction of the requested Party;
6. A statement that the applicant Party has pursued all means available in its own territory to obtain the information, except those that would give rise to disproportionate difficulties.

b. Entry into force:

Section 14 of the Agreement provides that the entry into force must be one month from the date of receipt of Argentina’s written notification to the United States that Argentina has completed its internal procedures.

Argentina notified fulfillment of internal requirements through Note DITRA 312/2017 which was received by the United States on October 13, 2017.

This means that as the United States received the notification from Argentina in October, the Exchange would enter into force on November 13, 2017, so the first fiscal period with respect to which information could be exchanged would be 2018.

The entry into force of this Exchange is relevant not only for taxpayers, but also for bank entities and registration agents, who must have sufficient time to adapt and prepare the proceedings concerning the performance contract.