New information regime for the entry of funds from abroad by Argentine residents

Please find below the highlights of this General Resolution.

1.   Which transactions need to be informed?

The main transactions to be informed are: (i) direct investments in the country, (ii) loans granted by international entities and by official credit agencies, (iii) financial loans, (iv) sales of equity of local corporations to direct investors or to portfolio investors, (v) payments of financial loans granted to non-residents, (vi) repatriation of investments of Argentine-residents, (vii) other investments of non-residents, (viii) collections due to the cancellation of certain hedging transactions (contratos de cobertura entre monedas extranjeras y de precios de commodities), and (ix) other investments in the country made by non-residents.

Founds transferred to Argentina in an amount exceeding US$ 50,000 in the same calendar month and by the same person who directly or indirectly orders the entry are excluded from this information regime. Furthermore, (i) the sale of foreign currency bills by Argentine residents, (ii) the sale of foreign currency held in local bank accounts for its transfer abroad, and (iii) sales of travelers’ checks, are also exempted. Resolution No 365/2005 of the Ministry of Economy exempted the repatriation of funds which were originally transferred out of Argentina for a specific purpose, provided that the Pesos are allocated to cancel such foreign debts indicated in the applicable regulations that permitted the original transfer.

2.   Who is obliged to inform the tax authorities?

Mainly, individuals, legal entities, estates and other kind of entities, to the extent they are residents and (i) order the entry of funds through a financial institution, (ii) enter the funds directly, or (iii) are the owners of the funds, no matter if they enter them directly or through any sort of intermediary.

Please be advised that for the purposes of this regime (i) individuals with Argentine nationality (whether native or naturalized) and foreign individuals who have obtained Argentine permanent residency, (ii) corporations and other kind of legal entities organized under Argentine laws, and (iii) trusts and mutual funds (fondos comunes de inversión) organized under Argentine law are deemed to be “residents”.

3.   What information must be given?

Mainly, the information must contain (i) the origin of the funds, (ii) the date the funds enter the country and the date of the transaction originating the funds, (iii) the amount and currency, (iv) the financial institution through which the funds enter, and (v) the country where the funds have been generated and the country from where they are being transferred.

4.    When does the obligation to inform begin and how often is it required?

The obligation to inform includes transactions taking place as of July 1, 2005, it has to be performed on a monthly basis and starts with the occurrence of the first entry of funds which must be informed. If in a certain period there is no entry to be reported, the informer shall submit a return to the tax authority with the legend “no movement” (sin movimiento); the obligation to inform ceases after three consecutive months with no entries to inform and arises again with the occurrence of the first entry required to be informed thereafter.

5.    What is the penalty for any breach in the obligation to inform?

ot complying with the information regime may cause the tax payer to be subject to a fine ranging from AR$ 5,000 to AR$ 10,000, depending on the characteristics of the transaction.