Submission of lawful funds and Tax Regularization Regime

On May 8, 2009, External Note No 2/2009 was published in the Official Gazette. By means of the Note, the Federal Tax Authority (“AFIP”) clarifies that taxpayers will not be responsible because of Criminal Foreign Exchange Regime (Law No 19,359) because of the lawful funds which are regularized under the Tax Regularization Regime set out by Law No 26,476 (the “Tax Regularization Regime”).

1.    The Note in context

The Tax Regularization Regime aims at regularizing holding of Argentine and foreign currency and other assets —in Argentina or abroad— submitting a special return, according to its terms and conditions. We have analyzed this regime in past editions.

Taxpayer’s submission of lawful funds under the Tax Regularization Regime entails “barring any civil, commercial and tax criminal action” providing legal requirements are met (Section 32:b, Law No 26,476).

It was not clear whether this benefit could be extended to eventual actions based on Criminal Foreign Exchange Regime (Law No 19,539), because of funds brought to Argentina.

2.    Construction by the Treasury Department Legal Counsel and AFIP

On May 5, 2009, Treasury Department Legal Counsel delivered Opinion No 88/09 stating that barring of criminal actions (provided by the Tax Regularization Plan) not only comprised civil, tax criminal and commercial action but actions derived from Criminal Foreign Exchange Regime as well.

Accordingly, on May 7, 2009, AFIP issued External Note No 2/2009 delivering a similar opinion.

This External Note is binding for AFIP’s officers who must refrain from filing any report (denuncia) because of infringements to the Criminal Foreign Exchange, for taxpayers who benefit from the Tax Regularization Regime (if funds are lawful).