New Tax Moratorium in the Province of Buenos Aires

1. Regulatory Framework

On July 29, 2011, ARBA issued Resolutions No.s 41, 42, 43 and 44/2011 that created the following regimes (all together, the “moratorium”):

1. Regularization of debts of Gross Income Tax, Stamp Tax, Real Estate Tax and Automobile Tax, due or accrued from December 31, 2010.
2. Regularization of debts of Gross Income Tax (IIBB) and/or Stamp Tax under investigation, determination or administrative discussion –even if the debts were due and up to the beginning of the judicial procedure.
3. Facilities for the payment of debts for Gross Income Tax, Stamp Tax, Real Estate Tax and Automobile Tax that were under tax foreclosure.
4. Regularization of debts of the Gross Income Tax and Stamp Tax, of the collection agents for withholding or perceptions omitted.

2. General Characteristics

The moratorium allows the taxpayer to pay the debt in cash (with no bonus, except in case (i), where there is a 10% bonus for cash payments) or installments. Each regime allows from 3 to 60 monthly and consecutive installments (with no bonus or financial interest). Plans implying more installments bear a monthly interest of 2%.

The term to choose the moratorium started on August 1, 2011 and finalizes on December 31, 2011.

Tax debts to be regularized vary according to each regime; in all cases the principal and the interest accrued must be considered. Except for the regularization of IIBB and Stamp tax (ii), if the taxpayer does not fulfill its payment obligation, ARBA would be automatically entitled to file for judicial proceedings to foreclose the debt, triggered in accordance with the following:

1. Taxpayer must have 3 unpaid installments, including the advance payment, independently of whether they are consecutive or alternate, at the expiration of the following installment; or
2. To have an installment, advance payment or cash liquidation unpaid 120 days after the expiration of the last installment of the plan.

By adopting the moratorium the taxpayers or collector agents imply recognition of the debt and the statue of limitation is also suspended. Consequently, the Tax Authority will have a longer term to claim the taxes. When adopting the moratorium, the taxpayer shall also quit all judicial procedure or administrative discussion related to the regularized debt; except under Regime (ii) that allows for adopting the moratorium and continuing with the judicial or administrative discussion. In this case, should the regularized debt be greater than that resulting from the discussion, the difference may only be recovered by a judicial procedure (“demanda de repetición”).

The moratorium grants the Collection Agents (iv) a 100% reduction on the surcharges and fines (related to sections 59, 60 and 61, Tax Code).

The moratorium also allows for a lifting of a seizure or attachment measure (“embargo”) –or other precautionary measures- that may be done when at least 50% of the principal has been paid.

In order to regularize the debt under the moratorium, the taxpayers may fill in the forms provided at the Offices of ARBA. Regime (i) may also be adopted by phone, email or on ARBA’s web site. In most cases there are formal requirements to comply with, such as keeping the tax domicile updated.

In order to regularize debts under judicial procedure or to re-enter lapsed plans, the taxpayer should previously pay the judicial expenses accrued.

Finally, payment or refinancing plans related to debts allowed to refinance the moratorium, lapsed on October 31, 2011 and granted from January 1, 2000 may be reinitiated. In such cases, the taxpayer or collector agent must pay all the advance payments and pending installments by January 1, 2012.