Argentine Central Bank Authorizes Subscribing BOPREAL to Pay Profits and Dividends

On April 30, 2024, the Argentine Central Bank (BCRA) issued Communication “A” 7999, authorizing the subscription of Bonos para la Reconstrucción de una Argentina Libre (BOPREAL) bonds for up to the equivalent in local currency of the amount of profits and dividends pending payment to non-resident shareholders, according to the distribution determined by the shareholders' meeting.

Profits and dividends may be paid through:

1. transfers abroad of funds deposited in a local account and originated in the collection of principal and interest in foreign currency of the BOPREAL,
2. proceeds from the sale with settlement in foreign currency in Argentina or abroad of BOPREAL,
3. transfers of these bonds to depositaries abroad, for up to the amount acquired in the primary subscription.

Non-resident shareholders may also subscribe BOPREAL for those profits and dividends collected in ARS in Argentina as of September 1, 2019, that have not been remitted abroad. These will be adjusted according to the latest Consumer Price Index (CPI) available as of the subscription date.

Further, on May 6, 2024, the Executive Branch issued Decree 385/2024, extending the scope of the PAÍS tax to purchases of foreign currency for distributing profits and dividends and for repatriating investments of non-residents generated by collections in Argentina of such concepts received as from September 1, 2019, inclusive. This applies as well to BOPREAL subscriptions aligned with the Communication.

The applicable rate for the transfer of profits and dividends abroad will be 17.5%, both for purchasing foreign currency and for subscribing BOPREAL.

The financial entity intervening in the purchase of foreign currency or in the subscription of the BOPREAL will be in charge of collecting the PAIS tax. The tax will be calculated on the amount of ARS used to purchase the foreign currency or on the amount of ARS used for subscribing the BOPREAL.

The Argentine Tax Authority, through General Resolution 5509/24, adjusted its regulations to include the new transactions covered by the PAIS tax. The provisions in the Resolution therefore apply both for purchasing bills and foreign currency in foreign currency, and for subscribing bonds or securities as of the entry into force of Decree 385/2024.