Taxation and financial activities

1. Ruling No 64/2002 - Conversion of public debt - Secured loan

The ruling analyses tax aspects of the secured loans and bonds of the denominated “Canje 2” implemented through the Decree No 1387/2001. The tax authority understands that:

(i) The secured loans or the secured bonds should be valued at the end of the fiscal year at their closing price if they are traded on the stock exchange or at their acquisition cost plus interest, updating and exchange differences.

(ii) Interest arising from public bonds obtained from the conversion of the public debt established in Decree No 1387/2001 and the income arising from such conversion is exempt from income tax. The exemption includes exchange differences.

(iii) The difference between the market value or the acquisition cost and the tax valuation assigned at the end of the fiscal year prior to the conversion is taxable income or a deductible loss.

(iv) The same treatment should be granted to the capital income arising from the disposition of the secured bonds or loans (if the taxpayer is subject to adjustment for inflation rules) and to the difference between the tax cost of the bond at the end of the fiscal year and the nominal value of the bond paid by the Government, if such bond is held until maturity.

2. Ruling No 85/2002 – Foreign loans– Commitment fee

The tax authorities understand that the “commitment fee” for the period that the funds of a loan are available to the borrower until the funds are withdrawn by the borrower, is paid to a foreign beneficiary for the non utilization of a loan, is not considered to be a profit from Argentine sources and is not subject to income tax withholding.

3. Ruling No 90/2002 – Loans granted by the International Finance Corporation

The tax authorities understand that interest of loans granted by the International Finance Corporation are subject to Value Added Tax according to subsection d), section 1 of VAT Law.