Amendment to the Personal Assets Tax

Law No. 25,721 amended various provisions of the PAT Law. Among those, the following may be stressed:

1. Shares: The exemption over shares quoted at a stock exchange up to Argentine Pesos 100,000 has been repealed. The foregoing is in accordance with the obligation imposed on companies ruled by Law No 19,550 to pay the amount of the PAT that would otherwise correspond to the shareholders thereof for their shareholdings.

2. Public Bonds: An exemption for public bonds and Cedros is established. Before this amendment, the PAT Law did not include an exemption for this kind of assets. The exemptions that special laws provided were only applicable when the acquisition of the public bond was prior to the entry into force of Law No 24,468.

3. Negotiable Obligations: In principle, bonds publicly offered were exempt from this tax. Law No 24,468 repealed this exemption and included a paragraph to the PAT Law providing that “exemptions provided by general and particular laws concerning bonds issued according to Law No 23,576 shall not be applicable when their acquisition be subsequent to the entry into force of the law that incorporates this section”.

The new language Law No 25,721 included in the PAT Law provides that “the exemption provided for negotiable obligations issued according to Law 23,576, as amended, will not be applicable to this tax, when the acquisition is subsequent to the entry into force of Law 24,468”.

Thus, holding bonds is still subject to tax, unless its acquisition is prior to the entry into force of Law No 24,468.

4. Presumption applicable to public bonds: According to the PAT Law, when a foreign company that directly owns public bonds, negotiable obligations or shares of investment funds, those assets are deemed owned by individuals residing in Argentina. In such event, the tax is paid by a substitute taxpayer at a rate of 1,5%.

Law No 25,721 provides that this de facto presumption is not applicable to public bonds.

5. Delegation to the Argentine Government: The Argentine Government is authorized to repeal the exemptions provided for public bonds, Cedros and deposits with financial entities.