Impact of Tax on the Gratuitous Transfer of Assets on the Insurance Industry

By Provincial Laws No 14,044 and 14,200, the Congress of the Province of Buenos Aires amended the Provincial Tax Code, introducing the Tax on the Gratuitous Transfer of Assets.

This levy taxes any gratuitous transfer of assets. Acts levied, among others, are as follows: inheritances, bequests, donations, inheritances in advance and “any other transfer which may imply a gratuitous transfer of assets”.

Taxpayers are: a) individuals or legal entities beneficiaries of gratuitous transfer of assets, when domiciled within the Province of Buenos Aires; and b) persons domiciled outside the Province of Buenos Aires, when receiving a gratuitous transfer of assets, provided the assets are located within the Province of Buenos Aires.

On April 13, 2011, Resolution No 18/2011 was published in the Official Gazette of the Province of Buenos Aires, through which various amendments were introduced to the regulation of the Law of Tax on the Gratuitous Transfer of Assets, setting forth compulsory requirements for insurance companies, which shall be in force until the final collection regimes are implemented.

The main amendments are the following:

1. Insurance companies must:
    
   1. require that taxpayers demonstrate they have filed the sworn declaration, when they collect taxed insurance payments in their favor, if such payments are made within the jurisdiction of the Province of Buenos Aires, or outside to the benefit of persons domiciled in the Province of Buenos Aires; and
   2. control that the data contained in the sworn declaration coincides with that arising from the relevant transaction.


2. Insurance companies must comply with formal duties even in cases where there is no tax to be paid.
3. In order to calculate the tax, the Tax Collection Agency provides, on its website (www.arba.com.ar), the necessary tools to simulate the amount to be paid.