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Argentina: Withholding tax, income of foreign beneficiaries; Argentine shares, debt instruments

Argentina and withholding tax guidance

A tax resolution—AFIP General Resolution No. 4227 (12 April 2018)—was published in the official gazette to provide rules for withholding and remitting amounts of income tax in relation to financial income from investments earned by foreign beneficiaries. The resolution also includes rules regarding the payment of income tax on capital gains derived from the sale of shares when both the purchaser and seller are foreign beneficiaries (for sales effected after September 2013).


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Under the 2017 tax reform, income derived by foreign beneficiaries—provided they do not reside in Argentina—and funds that do not originate from non-cooperative jurisdictions are tax-exempt if: 

  • The income is derived from the sale of shares that are publicly traded in stock exchanges or stock markets under the supervision of the Argentine Securities and Exchange Commission (CNV). 
  • The income is interest income or capital gains from the sale of public securities, negotiable obligations, and certificates of deposit of shares issued abroad that represent shares issued by entities domiciled or located in Argentina (i.e., ADRs). In the case of ADRs, the new rules confirm that the source of the income is determined by the place where the original issuer of the shares is located. 

Income from LEBACS (Argentine Central Bank notes) does not fall within this exemption. Read more about the provisions in the tax reform law: TaxNewsFlash-Americas

Earlier in April 2018, Decreto No. 279/2018 was issued to address the tax treatment of Argentine-source financial income earned by foreign beneficiaries, pursuant to the 2017 tax reform provisions. Read TaxNewsFlash-Americas

Interest or return on investments

General Resolution No. 4227 imposes a requirement to withhold and remit tax on Argentine individuals or legal entities (depending on the type of financial instrument) in making payments to foreign beneficiaries. For these purposes, individuals or legal entities are defined to mean: 

  • In relation to deposits in financial institution—the bank
  • In relation to Argentine Central Bank notes (LEBACs)—the entity that has custody of (i.e., holds) the securities
  • In relation to corporate bonds, bonds and other securities—the individual or legal entity paying interest or making payments or returns on such securities
  • In relation to shares in mutual funds—the depositary company

The amount of withholding and the applicable presumed income will be determined pursuant to Decree No. 279/2018 (9 April 2018), as referenced above.

Tax withholding will be remitted by means of an “integrated electronic withholding system” (SIRE) according to a schedule of due dates as established in AFIP General Resolution No. 3726/2015 (26 January 2015).

Sale of securities—stock, notes, bonds, corporate bonds, LEBACs, others

General Resolution No. 4227 also establishes the individuals or legal entities that will act as withholding agents with respect to sales of stock, notes, bonds, corporate bonds, and LEBACs, among other instruments, as well as the method for calculating the withholding amounts, the administrative tax codes, and the regime under which the tax withholding is to be paid. The individuals or legal entities responsible for making the applicable withholding will be based on the following guidelines:

  • Argentine residents who acquire securities will act as income tax withholding agents upon making the related payment abroad.
  • In the case of LEBACS, corporate bonds, stock, and other securities placed by a public offering under authorization of the Argentine Securities Commission (except for those that may be exempt under the law), the entity exercising the custody of such securities will act as an income tax withholding agent.
  • In the case of shares in mutual funds, the depositary entity will act as the withholding agent.
  • When securities are acquired by a foreign individual or legal entity, the tax will be paid by the foreign beneficiary’s legal representative in Argentina (the seller). Absent such legal representative, the tax will be paid by the foreign beneficiary through an international wire transfer.

The withholding tax amount will be determined by applying the rates established under the income tax law (as amended by the tax reform law and Decree 279/2018) to 90% of (1) the gross amount paid for the securities, or (2) the amount of actual net income. Foreign beneficiaries that elect to determine the actual net income subject to withholding must report this election to the withholding agent or to their legal representatives, as appropriate, and provide the preliminary sales agreements relating to the transactions or other documents as proof or sufficient evidence of the acquisition and subsequent sale of the securities, as well as evidence that demonstrates the calculation of the computable cost, including any relevant adjustments.

Remittance of the withheld tax will be paid to the Argentine government in the following manner:

  • If the payment is made by the local withholding agents or by the foreign beneficiary’s legal representative in Argentina, then the payment must be remitted through the SIRE electronic system.
  • If the payment is made directly by the foreign beneficiary, then the payment must be remitted through an international wire transfer in U.S. dollars or euros and paid no later than 12:00 a.m. (Argentine time) on the 10th business day following the date of the subject transaction. Expenses and commissions incurred in relation to the transfer abroad and in the country of transfer will be borne by the individual or legal entity making the transfer.

Foreign beneficiaries—rules for non-cooperative jurisdictions

In the case of beneficiaries who reside in “non-cooperative” jurisdictions, or when the funds invested are from non-cooperative jurisdictions, the individuals or legal entities will withhold, as a one-time payment, an amount equal to 35% of the “presumed net income” (i.e., the taxpayer cannot choose between the presumed net income and the actual net income), based on the type of income and as provided under the tax reform law provisions and Decree 279/2018.

This withholding tax will be remitted according to the procedures described above.

Transactions conducted as from September 2013

Taxes on transactions conducted by foreign beneficiaries from September 2013 through the effective date of the tax reform law generally may be paid during the period 11 June through 13 June 2018, according to the following procedures:

  • Taxes on transactions that were not concluded through local stock exchanges or markets and transactions conducted through stock markets when the settlement agent has made the tax withholding must be remitted through the SIRE system.
  • Taxes for transactions involving assets acquired by a foreign individual or legal entity must be remitted through an international wire transfer—Starting 1 January 2018, the seller (beneficiary) is exclusively responsible for remitting the applicable withholding tax in the event the purchaser and the seller are foreign individuals or legal entities. The seller will appoint a legal representative in Argentina or make an international wire transfer (pursuant to the guidelines indicated above) in connection with transactions conducted or to be conducted between 1 January 2018 and 31 May 2018.

KPMG observation

Multinational companies that decide to invest in Argentine financial instruments (e.g., securities, bonds, stock, and mutual funds, among others) must comply with General Resolution No. 4227 in light of the changes to Argentina tax law introduced by the tax reform law in late December 2017.


For more information, contact a tax professional with KPMG’s Latin America Markets Tax practice or with the KPMG member firm in Argentina:

Alfonso A-Pallete | +1 (305) 913-2789 |

Rodolfo Canese | +(5411) 4316-5753 | 

Violeta Lagos | +(5411) 4316-5740 | 

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