Amendment to Personal Assets Tax

Law No 26,317 was published in the Official Gazette on December 10, 2007. Please find below a brief summary of the main changes it brought to the Personal Assets Tax:

1. Repeal of the minimum exemption: It repeals the AR$ 102,300 exemption for assets located in Argentina or in foreign countries owned by individuals domiciled or estates (sucesiones indivisas) located in Argentina.

2. New tax exemption: It sets an exemption for assets with an aggregate value equal or under AR$ 305,000. It should be noted that if the aggregate value exceeds this minimum amount, the total value of those assets is taxed (prior to this modifications, only the portion exceeding the minimum exemption was taxed). Furthermore, this new exemption may not be restricted to individuals domiciled or undivided estates located in Argentina.

3. New Rates: It sets new rates for local individuals and estates:

The tax rate for assets located in Argentina owned by foreign taxpayers was increased from 0.75% to 1.25%.

4. Valuation of real estate: it was added that the valuation for purposes of this tax could never be lower than the fiscal appraisal (i.e. for local tax purposes) as of December 31 of the relevant year.

The Law states that these modifications are applicable as of fiscal year 2007; therefore, they have to be considered for the determination of this year’s tax liability. Please note that the Argentine Tax Authority has recently issued General Resolution No 2,359 (published in the Official Gazette on December 13, 2007) setting forth a mechanism for the refund of advance payments (anticipos) of the tax for those tax payers benefiting from the new tax exemption.