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Volume 22 Article 26
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Is Argentina Ready for the New International Tax Era? Is Argentina Ready for the New International Tax Era?
Axel A. Verstraeten
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912
FLORIDA TAX REVIEW
Volume 22 2019 Number 3
Is ArgentInA reAdy for the new InternAtIonAl
tAx erA?
by
Axel A. Verstraeten*
AbstrAct
We are facing a new era in the international tax system. Even though
we have achieved consensus in many areas, adopting multilateral solu-
tions or standardizing by establishing minimum standards, we are also
facing unilateral measures due to a lack of consensus in other very sen-
sitive areas. Argentina’s approach toward the international tax system
has always been very dependent on the local politics. In very recent
years, the objective of becoming a member of the OECD has made
Argentina its best student. But it has not always been this way. To under-
stand if Argentina is ready to face the new era that the international
tax system is going through, we will review four relevant— and capri-
ciously chosen— aspects of Argentine international tax rules, taking into
account the evolution, current situation, and effects. We will analyze the
tax treaty network, transparency policy, CFC rules, and taxation of dig-
ital economy.
* Axel A. Verstraeten, tax lawyer at Estudio Levene; LL.M. in
International Taxation, University of Florida (2008).
2019] Is Argentina Ready for the New International Tax Era? 913
I. IntroductIon ���������������������������������������������������������������������������� 913
II. the ArgentIne tAx treAty network ������������������������������������914
III. InformAtIon exchAnge In ArgentInA ������������������������������������926
IV. ArgentIne cfc rules ������������������������������������������������������������934
V. ArgentInA’s ApproAch towArd tAxAtIon of
dIgItAl economy ��������������������������������������������������������������������� 941
VI. conclusIons �����������������������������������������������������������������������������944
I. IntroductIon
The fight against tax evasion and aggressive tax planning has been, in
general, a common goal for both developed and developing countries.
Lack of transparency and coordination was the main impediment. But,
of course, that lack of political willingness on the part of developed
countries was the real cause.
The OECD, originally formed by the largest economies, was the
main— and probably sole— designer of the international tax rules until
the United Nations, empowered by the developing countries, stood up
in the late 1970s. Since then, the OECD has started to show interest in
topics that affect developing countries, such as the role of tax havens—
arguably, sponsored or backed by developed countries. Also, OECD
countries— or at least some of them— have started to accept deviations
from the OECD Model when negotiating tax treaties with developing
countries.
Finally, the 2008 financial crisis caused the OECD, this time
pushed by the G- 20, to seriously address the lack of transparency and
the need to fix the rules that enabled aggressive tax planning, by means
of the BEPS project. Even though it is argued that the international tax
system is basically formed by the tax treaty network,
1
the BEPS project
aimed to influence the amendment and standardization of several domes-
tic rules with international impact. On the other hand, avoiding double
taxation always created tension between developed and developing coun-
tries. While developed countries considered it the main objective of tax
treaties, developing countries just pursued, with no success, the preser-
vation of their first right to tax.
The rationale was that developed countries had similar flows of
investments, which were capital exporters and residence countries.
1. See Yariv Brauner, Treaties in the Aftermath of BEPS, 41 Brook�
J� Int’l l� 973 (2016), and the citations included therein.
914 Florida Tax Review [Vol 22:3
Developing countries, on the contrary, were capital importers and source
countries. The digital economy broke this logic. The source country is
where users and the market are, and the residence country is
everywhere— and nowhere. Market countries— or source countries
under the digital economy logic— include the United States, the United
Kingdom, and Germany but also China, India, Brazil, Indonesia, and
Nigeria.
We are now facing a new era in the international tax system.
Even though we have achieved consensus in many areas, adopting mul-
tilateral solutions or standardizing by establishing minimum standards,
we are also facing unilateral measures due to a lack of consensus in other
very sensitive areas. Argentina’s approach toward the international tax
system has always been very dependent on the local politics. In very
recent years, the objective of becoming a member of the OECD has made
Argentina its best student. But it has not always been this way.
To understand if Argentina is ready to face the new era that the
international tax system is going through, we will review four relevant—
and capriciously chosen— aspects of Argentine international tax rules,
taking into account the evolution, current situation, and effects. We will
analyze the tax treaty network, transparency policy, CFC rules, and tax-
ation of digital economy.
II. the ArgentIne tAx treAty network
It has been argued that the international tax system is basically formed
by the tax treaty network.
2
In this sense, the traditional— and original—
reason to enter into a tax treaty was the avoidance of double taxation. It
is understood that double taxation became critical after World War I,
when countries had to increase taxes substantially. The newly created
League of Nations and the International Chamber of Commerce led the
search for solutions.
3
The Economic and Finance Committee of the
League of Nations asked four economists to prepare a report on this
2. Id.
3. See JoInt Comm� on Internal rev� tax’n, legIslatIve HIstory
of UnIted states tax ConventIons, volUme 4: model tax ConventIons
sec. 1, 4001 et seq. (1962) (League of Nations materials) [hereinafter vol� 4:
model tax ConventIons].
2019] Is Argentina Ready for the New International Tax Era? 915
topic,
4
which was the starting point for the Draft Model Convention for
the Prevention of Double Taxation, prepared by the League of Nations.
5
As a result of the report submitted in 1923 by the four econo-
mists and a second report submitted in 1925 by a newly created group
of technical experts,
6
the League of Nations prepared the first model con-
vention, together with a new report on double taxation.
7
The 1927
Model was criticized by Chile, which was the only South American
country that issued an opinion. Chile argued that the 1927 Model gave
too much predominance to residence taxation, which would lead to a
major loss of revenue for developing countries.
8
With the outbreak of World War II, the countries not involved
in it
9
formed a new subcommittee within the Fiscal Committee. This
new subcommittee held two meetings in Mexico, which led to publica-
tion of a new model convention in 1943.
10
Following Chile’s reaction to
the 1927 Model, the new subcommittee drafted a model seeking to favor
source taxation. Developed countries’ response came very soon after.
As a result of a new meeting of the League of Nation’s Fiscal Commit-
tee, a new model convention was published in 1946.
11
The London Model
4. g� BrUIns et al�, report on doUBle taxatIon sUBmItted to
tHe fInanCIal CommIttee (1923), reprinted in vol� 4: model tax Conven-
tIons, supra note 3, at 4003.
5. doUBle taxatIon and tax evasIon: report presented By tHe
CommIttee of teCHnICal experts on doUBle taxatIon and tax evasIon
(League of Nations 1927), reprinted in vol� 4: model tax ConventIons,
supra note 3, at 4111 [hereinafter 1927 doUBle taxatIon & tax evasIon
report].
6. doUBle taxatIon and tax evasIon: report and resolUtIons
sUBmItted By tHe teCHnICal experts to tHe fInanCIal CommIttee of tHe
leagUe of natIons (League of Nations 1925), reprinted in vol� 4: model tax
ConventIons, supra note 3, at 4057.
7. 1927 doUBle taxatIon & tax evasIon report, supra note 5.
8. arvId a� skaar, permanent estaBlIsHment: erosIon of a tax
treaty prInCIple 84 (1991).
9. These countries were basically Latin American countries, the
United States, and Canada.
10. League of Nations, Model Bilateral Conventions for the Pre-
vention of International Double Taxation and Fiscal Evasion (1943).
11. League of Nations, Model Bilateral Convention for the Preven-
tion of the Double Taxation of Income and Property (1946).
916 Florida Tax Review [Vol 22:3
was basically a redrafting of the Mexico Model, back to previous models
published by the League of Nations,
12
which favored residence taxation.
The task of establishing a mechanism to solve the problem of
double taxation at an international level was followed by the Organisa-
tion for European Economic Co- operation (OEEC)
13
and finally by the
OECD. A series of four reports prepared by the Fiscal Committee of the
OEEC from 1958 to 1961
14
led to the publication of the first version of
the OECD Model.
15
Also, the United Nations made important contribu-
tions to this area.
16
In order to achieve the first— and at that moment primary—
objective of avoiding double taxation, a very important question needed
to be answered: Which country should have the right first to tax: the
source or the residence country? This discussion was solved— in gen-
eral terms— by granting limited taxation of passive income to source
countries and unlimited taxation to residence countries. In the case of
active income, the residence country would tax (without limit), and the
source country would have no power to tax, unless the recipient had a
permanent establishment in the source country.
12. We refer to the 1927 Model and the three multilateral draft con-
ventions prepared by the League of Nations and published in 1931.
13. The predecessor of the OECD. See vol� 4: model tax Conven-
tIons, supra note 3, sec. 2, 4443 et seq. (OEEC materials).
14. Id. at 4445– 4700 (reprinting these four reports); see also
OECD, Model Tax Convention on Income and on Capital: Condensed Version
2017, intro. ¶ 6 (2017), https:// doi . org / 10 . 1787 / mtc_cond - 2017 - en (describing
history).
15. OECD, Draft Double Taxation Convention on Income and Cap-
ital (1963), https:// doi . org / 10 . 1787 / 9789264073241 - en [hereinafter 1963
OECD Model].
16. For an extensive and in- depth analysis of the history of double
tax treaties, see the proceedings (not yet published) of the conference on the
history of double taxation that took place in 2008 in Austria. See The History
of Double Tax Conventions, Rust (2008), WU, https:// www . wu . ac . at / taxlaw
/ eventsmain / internatevents / scientificrust / historydtc (last visited Sept. 4, 2020)
(invitation, program, and gallery from the conference); Matthias Huber &
Daniel P. Rentzsch, Conference Report: History of Double Taxation Conven-
tions, Rust, 4– 7 July 2008, 36 Intertax 533 (2008); see also History of Tax
Treaties, tax treatIes HIstory, http:// www . taxtreatieshistory . org / (last vis-
ited Sept. 2, 2020).
2019] Is Argentina Ready for the New International Tax Era? 917
This structure of the tax treaties seemed to make sense in the
case of two countries having similar flows of cross- border income. In a
second stage of the evolution of tax treaties other issues became critical
and shared the top concerns, together with the avoidance of double tax-
ation, in entering into a tax treaty: preventing international fiscal eva-
sion, non- discrimination, and exchange of information, among others.
17
In response to the structure given by the OECD Model some alterna-
tives surged.
18
A first example was the model convention prepared by
the Andean Pact, especially relevant in South America.
19
This model
convention was the opposite of the OECD Model and was based on
territorial taxation, granting exclusive power to tax to the source coun-
try (with very few exceptions). Somewhere in the middle— probably
closer to OECD’s side— between the OECD (based on residence tax-
ation) and Andean Pact (based on source taxation) model conventions,
we could place the model convention prepared by the United Nations.
20
It could be said that both alternatives failed.
21
17. OECD, Model Tax Convention on Income and on Capital 2010,
intro. ¶ 16 (2012), htt ps:// doi . org / 10 . 1787 / 9789264175181 - en.
18. Among others (in chronological order): General Convention for
Fiscal Cooperation Among the Member States of the African, Malagasy, and
Mauritian Common Organization (OCAM), Jan. 29, 1971, Tax Analysts Doc.
97- 32923; Treaty on Avoidance of Tax Duplication and Control of Tax Eva-
sion Amongst the States of the Arab Economic Unity Council, Dec. 3, 1973,
Tax Analysts Doc. 96- 9280; Council for Mutual Economic Assistance (Com-
econ) Agreement on the Avoidance of Double Taxation on the Income and
Property of Bodies Corporate, May 19– June 21, 1978, Tax Analysts Doc. 95-
30498; Association of Southeast Asian Nations: 1987 Intra- ASEAN Model
Double Taxation Convention, Dec. 15, 1987, Tax Analysts Doc. 2000- 31082;
Caribbean Community Agreement Concerning Taxes on Income, Profits or
Gains and Capital Gains, and Regional Trade and Investment, July 6, 1994,
Tax Analysts Doc. 95- 30604.
19. Model Double Taxation Convention for the Andean Pact Coun-
tries, Nov. 16, 1971, Tax Analysts Doc. 96- 11757.
20. U.N. Model Double Taxation Convention Between Developed
and Developing Countries (2001), https:// www . un . org / ga / search / view_doc
. asp ? symbol=ST / ESA / PAD / SER . E / 21 & Lang=E.
21. Only two countries could enter into a tax treaty based on the
Andean Pact Model Convention with a country outside the Andean Pact (now
Andean Community). These countries were Chile and Bolivia; both signed a
tax treaty with Argentina. See discussion infra notes 27– 29 and accompany-
ing text. The U.N. Model was not used for many tax treaty negotiations; only
918 Florida Tax Review [Vol 22:3
Argentina’s concern for double taxation started very early.
22
In
1961, a special commission in the Treasury Department was formed to
deal with treaty negotiations.
23
Even before this, as early as 1946, Argen-
tina had entered into several tax treaties, limited to income derived
from international transport activities.
24
Argentina was probably one of
the first countries in South America to enter into a general tax treaty.
The one with Sweden was signed on September 3, 1962, and became
effective on January 1, 1963, even before the publication of the first ver-
sion of the OECD Model.
After this occurred, Argentina entered into various tax treaties.
The first one (second overall) was signed with the Federal Republic
of Germany on July 13, 1966.
25
At the end of 1972, with effect from
January 1, 1974, Argentina terminated this tax treaty, but it was rene-
gotiated and a new tax treaty was signed in 1978.
26
Also, even though
Argentina was not a party to the Andean Pact, in 1976 it signed
a few provisions are commonly incorporated into double taxation conventions
(articles 5.2, 12, and 14).
22. For a complete analysis, see Adolfo Atchabahian, Argent ina’s
Tax Treaty Network and the Distinctive Features of Its Treaties, tax treaty
monItor, June 2001, at 225; Axel A. Verstraeten, Argentina’s Struggle in
Negotiating Double Tax Conventions, 49 tax notes Int’l 957 (Mar. 17,
2008).
23. See Atchabahian, supra note 22.
24. As of August 2019, Argentina had 17 treaties in force regarding
income derived from international transport activities: China, Colombia,
Cuba, Ecuador, Greece, Iran, Israel, Japan, Malaysia, Panama, Paraguay,
Peru, Portugal, United States, Uruguay, and Venezuela. See Convenios Vigen-
tes para Evitar la Doble Imposición en Materia de Transporte Internacional,
goBIerno arg�, https:// www . argentina . gob . ar / economia / ingresos publicos
/ con veniostransporte (last visited Dec. 10, 2020).
25. The two countries agreed to temporary measures in order to
apply certain provisions of the tax treaty in 1974 and 1975 (as established by
Law No. 21352, July 6, 1976 (Arg.); see also Mary Mercedes Marti, Latin
American Tax Law Update: 1976, 9 law� amerICas 584, 587 & n.13 (1977);
infra note 26.
26. Convention Between the Federal Republic of Germany and the
Argentine Republic for the Avoidance of Double Taxation with Respect to
Taxes on Income and Property, Ger.- Arg., July 13, 1978, 1246 U.N.T.S. 241.
2019] Is Argentina Ready for the New International Tax Era? 919
two— very similar— tax treaties with Bolivia
27
and Chile
28
based on the
Andean Pact Model.
29
In 1979, Argentina signed tax treaties with Aus-
tria,
30
France,
31
and Italy,
32
and in 1980 with Brazil.
33
All of these tax
treaties were based on the 1977 OECD Model, with some differences.
In 1980, Argentina signed a tax treaty with the United States,
34
which
27. Convention Between the Argentine Republic and the Republic
of Bolivia for the Avoidance of Double Taxation, Arg.- Bol., Oct. 30, 1976, Tax
Analysts Doc. 97- 27828.
28. Convention Between the Argentine Republic and the Republic
of Chile for the Avoidance of Double Taxation with Respect to Taxes on
Income, Earnings, or Profits, and on Capital and Wealth, Arg.- Chile, Nov. 13,
1976, Tax Analysts Doc. 97- 24819 (in force from Dec. 19, 1985, but since ter-
minated).
29. For an analysis of the treaty with Chile, see Axel A. Ver-
straeten, El Convenio para Evitar la Doble Tributación Entre Chile y la
Argentina, revIsta dereCHo fIsCal, Mar./Apr. 2009, at 207. For an analysis of
the treaty with Bolivia, see Axel A. Verstraeten, El Convenio para Evitar la
Doble Tributación Entre Bolivia y Argentina, in temas en dereCHo trIBU-
tarIo en HomenaJe al profesor alfredo BenItez rIvas 83 (Alvaro Villegas
Aldazosa ed., 2010).
30. Convention Between the Argentine Republic and the Republic
of Austria for the Avoidance of Double Taxation with Respect, to Taxes on
Income and on Capital, Arg.- Austria, Sept. 13, 1979, Tax Analysts Doc. 97-
24818. This treaty was unilaterally terminated by Argentina on June 28, 2008,
effective from January 1, 2009. See Larissa Hoaglund, Argentina Terminates
Tax Treaty With Austria, 51 tax notes Int’l 147 (July 14, 2008).
31. Convention Between the Government of the French Republic
and the Government of the Argentine Republic for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on
Income and Capital, Fr.- Arg., Apr. 4, 1979, 1264 U.N.T.S. 3.
32. Convention Between the Argentine Republic and the Italian
Republic for the Avoidance of Double Taxation with Respect to Taxes on
Income and on Capital and for the Prevention of Fiscal Evasion, with Proto-
col, It.- Arg., Nov. 15, 1979, Tax Analysts Doc. 97- 28609- I.
33. Convention Between the Federative Republic of Brazil and the
Argentine Republic for Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income, Braz.- Arg., May 17, 1980,
1300 U.N.T.S. 33.
34. JoInt Comm� on tax’n, 97tH Cong�, JCs- 49- 81, explanatIon of
proposed InCome tax treaty (and proposed protoCol) Between tHe UnIted
states and tHe argentIne repUBlIC (1981); see also Argentina- United States:
920 Florida Tax Review [Vol 22:3
resembled the 1977 OECD Model and the 1977 U.S. Model, but included
a tax sparing provision. This treaty, however, did not obtain approval
by the U.S. Senate.
During the rest of the 1980s, Argentina did not enter into any
tax treaties; however, this changed dramatically in the 1990s. During the
1990s and early 2000s, Argentina signed eleven tax treaties (Australia,
35
Belgium,
36
Canada,
37
Denmark,
38
Finland,
39
Netherlands,
40
Norway,
41
1981 Income and Capital Tax Convention and Final Protocol, Tax Analysts
Doc. 94- 30747 (treaty was not approved and was abandoned).
35. Agreement Between the Government of Australia and the Gov-
ernment of the Argentine Republic for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with Respect to Taxes on Income and Proto-
col, Austl.- Arg., Aug. 27, 1999, Tax Analysts Doc. 1999- 31445.
36. Convention Between the Argentine Republic and the Kingdom
of Belgium for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income and on Capital, Arg.- Belg., June 12,
1996, Tax Analysts Doc. 1999- 3944.
37. Convention Between Canada and the Argentine Republic for
the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with
Respect to Taxes on Income and on Capital, Can.- Arg., Apr. 29, 1993, Tax
Analysts Doc. 93- 31570.
38. Convention Between the Government of the Kingdom of Den-
mark and the Government of the Republic of Argentina for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes
on Income and on Capital, Den.- Arg., Dec. 12, 1995, Tax Analysts Doc. 96-
31248.
39. Agreement Between the Republic of Finland and the Argentine
Republic for the Avoidance of Double Taxation with Respect to Taxes on
Income and on Capital, Fin.- Arg., Dec. 13, 1994, Tax Analysts Doc. 96- 2267.
40. Convention Between the Kingdom of the Netherlands and the
Argentine Republic for the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with Respect to Taxes on Income and on Capital, Neth.-
Arg., Dec. 27, 1996, Tax Analysts Doc. 98- 4044.
41. Convention Between the Kingdom of Norway and the Republic
of Argentina for the Avoidance of Double Taxation and the Prevention of Fis-
cal Evasion with Respect to Taxes on Income and on Capital, Nor.- Arg.,
Oct. 8, 1997, Tax Analysts Doc. 98- 4932.
2019] Is Argentina Ready for the New International Tax Era? 921
Russia,
42
Spain,
43
Switzerland,
44
and the United Kingdom
45
) and renego-
tiated the treaty it had with Sweden.
46
All of these tax treaties seem to
resemble the U.N. Model.
In principle, it could be said that Argentina could divide its tax
treaties into four groups, which respond to different moments in Argen-
tina’s political situation. A first group would include the early versions
of the treaties signed with Sweden and Germany in the 1960s. A second
42. Convention Between the Government of the Russian Federa-
tion and the Government of the Republic of Argentina for the Avoidance of
Double Taxation with Respect to Taxes on Income and on Capital, Russ.- Arg.,
Oct. 10, 2001, Tax Analysts Doc. 2007- 2310.
43. Convention Between the Kingdom of Spain and the Argentine
Republic for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income and on Capital, Spain- Arg., July 21,
1992, 1854 U.N.T.S. 149. This 1992 treaty terminated as of January 1, 2013.
See Sebastián López- Sansón & Fernando Esteban Morera- Martínez, News
Analysis:Why Argentina Terminated Its Tax Treaties with Chile, Spain, Swit-
zerland, Tax Analysts Doc. 2012- 15224 (2012).
44. Convention Between the Swiss Confederation and the Argen-
tine Republic for the Avoidance of Double Taxation with Respect to Taxes on
Income and on Capital, as Amended Through 2006, Switz.- Arg., Apr. 23,
1997, Tax Analysts Doc. 97- 30953- I. The tax treaty was not submitted to Con-
gress for approval nor published. However, both governments agreed that the
tax treaty would become effective on January 1, 2001 (note exchanged on
Nov. 23, 2000). See Cristian E. Rosso Alba & Lucía Ibarreche, Argentina
Terminates Provisional Application of Tax Treaty with Switzerland, Tax Ana-
lysts Doc. 2012- 2785. This was done in order to avoid the trigger of several
most favored nation clauses included in Argentine tax treaties signed with
other European countries. Id. In 2012, the 1997 treaty was terminated. Id.; see
also López- Sansón & Morera- Martínez, supra note 43.
45. Convention Between the Government of the United Kingdom
of Great Britain and Northern Ireland and the Government of the Republic of
Argentina for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income and Capital, U.K.- Arg., Jan. 3,
1996, Tax Analysts Doc. 96- 31575.
46. Convention Between the Kingdom of Sweden and the Argen-
tine Republic for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income, Swed.- Arg., May 31, 1995,
Tax Analysts Doc. 95- 30592; see also lag (1995:1338) om dUBBelBeskat-
tnIngsavtal mellan sverIge oCH argentIna (Svensk författningssamling
[SFS] 1995:1338) (Swed.).
922 Florida Tax Review [Vol 22:3
group would include those signed— including the one renegotiated—
between the mid- 1970s and early 1980s. A third group would include
the treaties signed during the 1990s and early 2000s. A fourth group
would include treaties signed since 2013.
The first group of treaties signed by Argentina responded to dif-
ferent situations. The treaty with Sweden was based on the source prin-
ciple, meaning that each country taxed the income originating in its
territory. This was the prevailing doctrine in those years. The treaty with
Germany was based on the 1963 OECD Model
47
and represented a sac-
rifice to Argentina. The second group of tax treaties was negotiated
during a de facto government that had an open economy strategy. The
treaties signed with Bolivia, Brazil, and Chile represent the common
idea, during those years, that a regional integration was the objective of
the region; also, these countries had de facto governments as well as
very good relations with the Argentine government. This is maybe
the reason why the treaties with Bolivia and Chile were based on the
source principle. Following the economic model adopted by the de
facto government in power during this stage, the treaties signed with
Austria, France, and Italy gave many advantages to investments arising
from those countries into Argentina.
During the 1980s, no tax treaties were negotiated because the
government considered that it was not worthwhile to sign treaties if they
implied a revenue sacrifice. This changed in 1989 when a liberal presi-
dent won the elections. Argentina began an open- economy period: pub-
lic services were privatized— following the Washington Consensus
recommendations— and treaty negotiations restarted. Argentina’s nego-
tiations were focused on European countries because foreign direct
investment came from those countries; Australia and Canada were the
exceptions. These treaties followed the U.N. and OECD Models, and in
some cases contained special provisions not commonly included in tax
treaties between developed and developing countries. In a sense, these
deviations could be considered as a victory for Argentina. Consequently,
these countries making concessions to Argentina included most favored
nation clauses, making sure that the “exceptions” they were making were
applied to other OECD countries. The fact that Argentina’s tax treaty
47. See 1963 OECD Model, supra note 15.
2019] Is Argentina Ready for the New International Tax Era? 923
negotiator was Antonio Hugo Figueroa (a member of the U.N. Group of
Experts that drew up the U.N. Model) was surely an influence.
48
It is very important to take into account that the first and sec-
ond group of tax treaties signed by Argentina were negotiated when
Argentina had a territorial taxation system in force. This changed in
1992 when the law was amended. However, it was not until 1998 that
the worldwide taxation system came into force with the enactment of a
whole new chapter in the income tax law and regulations. This situa-
tion may explain some of the provisions contained in Argentina’s tax
treaties signed in the past, considering Argentina had no tax interest
regarding foreign income earned by Argentine taxpayers.
The inertia of this period lasted until 2006 when the last tax
treaty of this group was signed with Russia. Argentina had suffered sub-
stantial changes, including a massive economic crisis in 2001 and the
election in 2003 of a soon- to- become populist government that lasted
12 years. Some of the tax treaties in force included loopholes that cre-
ated substantial tax savings for foreign investors. The tax treaty with
Austria included exemptions on interest payments, capital gains, and
tax on assets, which allowed an Argentine resident individual to invest
abroad through Austrian structures that resulted in double non-
taxation.
49
The tax treaties with Chile, Spain, and Switzerland exempted
residents of those countries from paying taxes on Argentine assets, dis-
criminating against residents from elsewhere. The tax treaty with Chile
included exemptions on several other flows of income
50
and the one
with Switzerland beneficial tax treatment on royalty payments.
48. See Antonio Hugo Figueroa, International Double Taxation:
General Reflections on Jurisdictional Principles, Model Tax Conventions and
Argentina’s Experience, 59 BUll� Int’l tax’n 379 (2005).
49. Axel Verstraeten, Bonos Austríacos, ¿Ahora Qué?, el CronI-
sta (Aug. 7, 2008), https:// www . cronista . com / impresageneral / Bonos - austria
cos - ahora - que - 20080807 - 0093 . html.
50. Fernando Garcia & Axel Verstraeten, ¿Abuso de Tratado?
(Primera Parte), perIódICo eConómICo trIBUtarIo, no. 525 (Dec. 9, 2013);
Fernando Garcia & Axel Verstraeten, ¿Abuso de Tratado? (Segunda Parte),
perIódICo eConómICo trIBUtarIo, no. 526 (Dec. 10, 2013).
924 Florida Tax Review [Vol 22:3
These situations led Argentina to unilaterally terminate the tax
treaties with Austria,
51
Chile,
52
Spain,
53
and Switzerland.
54
These termi-
nations led to the formation of a committee
55
to review and assess all
tax treaties in force. However, no more tax treaties were renegotiated or
terminated.
Spain is one of the largest foreign investors in Argentina, so a
new tax treaty was immediately negotiated and signed.
56
The same
occurred with Switzerland.
57
These tax treaties, signed in 2013 and 2014,
were very similar to the old ones, which were unilaterally terminated
by Argentina, but did not include any of the loopholes that caused such
termination. It could be said that they followed in essence the U.N.
Model.
51. The tax treaty was terminated on June 26, 2008, effective as of
Jan. 1, 2009. See supra note 30. The termination notice was published on
July 22, 2008, in the Boletín ofICIal at page 20, https:// www . boletinoficial
. gob . ar / detalleAviso / primera / 9254611 / 20080722 ? busqueda=2.
52. The tax treaty was terminated on June 29, 2013, effective as of
Jan. 1, 2013. Argentina Terminates Three Tax Treaties, ey tax InsIgHts
(Dec. 2012), taxinsights . ey . com / archive / archive - articles / argentina - terminates
- three - tax - treaties . aspx [hereinafter ey tax InsIgHts].
53. Id. The tax treaty was terminated on June 29, 2012, effective as
of Jan. 1, 2013.
54. The tax treaty had provisional application which was termi-
nated by Argentina on Jan. 16, 2012, and effective as of such date. Id.; see also
supra note 44.
55. Administración Federal de Ingresos Públicos [AFIP], Dis-
posición 345/2013, Aug. 7, 2013.
56. Convenio entre el Reino de España y la República Argentina
para Evitar la Doble Imposición y Prevenir la Evasión Fiscal en Materia de
Impuestos sobre la Renta y sobre el Patrimonio, Spain- Arg., Mar. 11, 2013,
Tax Analysts Doc. 2013- 6458.
57. Convention Between the Swiss Confederation and the Argen-
tine Republic for the Avoidance of Double Taxation with Respect to Taxes on
Income and on Capital, Switz.- Arg., Mar. 20, 2014, Tax Analysts Doc. 2014-
6762.
2019] Is Argentina Ready for the New International Tax Era? 925
In 2015, Argentina signed new tax treaties with Chile
58
and
Mexico,
59
the latter became the first new treaty partner of Argentina
since 2006. Following the change of government in December 2015, with
a more open economy idea, Argentina signed tax treaties with the United
Arab Emirates (2016),
60
Qatar (2018),
61
Turkey (2018),
62
Japan (2019),
63
Luxembourg (2019),
64
Austria (2019),
65
amended the existing one with
58. Convenio entre la República Argentina y la República de Chile
para Eliminar la Doble Imposición em Relación a los Impuestos sobra la
Renta y sobra el Patrimonio y para Prevenir la Evasión y Elusión Fiscal, Arg.-
Chile, May 15, 2015, Tax Analysts Doc. 2015- 11910.
59. Acuerdo entre los Estado Unidos Mexicanos y la República
Argentina para Evitar la Doble Imposición y Prevenir la Evasión Fiscal com
Respect a los Impuestos sobre la Renta y sobre el Patrimonio, Mex.- Arg.,
Nov. 4, 2015, Tax Analysts Doc. 2015- 26646.
60. Convention Between the Government of the Argentine Repub-
lic and the Government of the United Arab Emirates for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes
on Income and on Capital, Arg.- U.A.E., Nov. 3, 2016, Tax Analysts Doc.
2016 - 23178.
61. Agreement Between the Government of the State of Qatar and
the Government of the Argentine Republic for the Avoidance of Double Tax-
ation and the Prevention of Fiscal Evasion with Respect to Taxes on Income
and on Capital, Qatar- Arg., Apr. 19, 2018, Tax Analysts Doc. 2018- 39354.
62. Convention Between the Argentine Republic and the Republic
of Turkey for the Elimination of Double Taxation with Respect to Taxes on
Income and the Prevention of Tax Evasion and Avoidance, Arg.- Turk., Dec. 1,
2018, Tax Analysts Doc. 2019- 5286.
63. Convention Between Japan and the Argentine Republic for the
Elimination of Double Taxation with Respect to Taxes on Income and the
Prevention of Tax Evasion and Avoidance, Japan- Arg., June 27, 2019, Tax
Analysts Doc. 2019- 25281.
64. Convention Between the Argentine Republic and the Grand
Duchy of Luxembourg for the Elimination of Double Taxation with Respect
to Taxes on Income and on Capital and the Prevention of Tax Evasion and
Avoidance, Arg.- Lux., Apr. 13, 2019, Tax Analysts Doc. 2019- 17002.
65. Convention Between the Argentine Republic and the Republic
of Austria for the Elimination of Double Taxation with Respect to Taxes on
Income and on Capital and the Prevention of Tax Evasion and Avoidance,
Arg.- Austria, Dec. 6, 2019, Tax Analysts Doc. 2020- 11739 (not yet in force).
926 Florida Tax Review [Vol 22:3
Brazil (2017),
66
and it is negotiating new tax treaties with Israel
67
and
has been renegotiating the existing tax treaties with France and
Ger many.
68
A common feature of the tax treaties signed by Argentina since
2015 is that they all substantially follow Action 6 of the BEPS project.
Moreover, Argentina has already signed the Multilateral Convention to
Implement Tax Treaty Related Measures to Prevent Base Erosion and
Profit Shifting (MLI).
69
It is difficult to conclude if the change in Argen-
tina’s tax treaty policy, consisting of actual signed tax treaties in recent
years and following BEPS, Action 6 guidelines, has had any positive
effect. MLI is not in force yet for Argentina. The most important for-
eign investors in Argentina still have old tax treaties (Spain, Germany,
Italy, France, and Switzerland) or no tax treaty at all (United States).
What we can indeed conclude is that Argentina has tried to follow the
OECD standard in this area, increasing the tax treaty network and fol-
lowing BEPS recommendations.
III. InformAtIon exchAnge In ArgentInA
International exchange of tax information in Argentina is done basically
by means of five instruments: (1) tax treaties including provisions related
to exchange of information (art. 26), (2) Tax Information Exchange
Agreements (TIEAs), authorized by section 101 of the Tax Procedure
Law, (3) Convention on Mutual Administrative Assistance in Tax Mat-
ters (CMAATM), (4) Multilateral Competent Authority Agreement on
Automatic Exchange of Financial Account Information (CRS MCAA),
and (5) Multilateral Competent Authority Agreement on the Exchange
of CbC Reports (CbC MCAA). As to tax treaties, all the network
66. Protocolo de Enmienda al Convenio para Evitar la Doble
Imposición y Prevenir la Evasión Fiscal com Respecto a los Impuestos sobre
la Renta entra la República Argentina y la República Federativa del Brasil y
Su Protocolo, Arg.- Braz., July 21, 2017, Tax Analysts Doc. 2017- 96770.
67. See Monica Anderson, Argentina, Israel Negotiating Tax
Treaty, 2019 Tax notes today Int’l 242- 10 (Dec. 17, 2019).
68. See Monica Anderson, Argentina, France Sign Protocol to Tax
Treaty, 2019 Tax notes today Int’l 239- 8 (Dec. 12, 2019); Larissa Hoaglund,
Germany Notes Status of Tax Treaty Negotiations, 2020 tax notes today
Int’l 14- 10 (Jan. 22, 2020).
69. Argentina: MLI Reservations and Notifications (Provisional),
June 7, 2017, Tax Analysts Doc. 2017- 93835.
2019] Is Argentina Ready for the New International Tax Era? 927
mentioned above include information exchange provisions. All of these
treaties include an exchange of information article, based on Article 26
of the OECD/U.N. Model. The only tax treaty that did not include this
provision was the one with Switzerland, which was terminated by
Argentina. However, Argentina and Switzerland signed a new agree-
ment in 2014, following the OECD Model and including Article 26.
Until mid- 2009, Argentina had no information exchange agree-
ments with tax havens or in jurisdictions with bank secrecy rules. Fol-
lowing the current trend, Argentina signed TIEAs with countries
considered to be tax havens and other countries. Argentina signed agree-
ments with the following countries and jurisdictions: Andorra (in
force),
70
Armenia (in force),
71
Aruba (in force),
72
Azerbaijan (in force),
73
Bahamas (in force),
74
Bermuda (in force),
75
Brazil (in force),
76
Cayman
70. Acuerdo entre el Gobierno del Principado de Andorra y el
Gobierno de la República Argentina para el Intercambio de Información en
Materia Fiscal, Andorra- Arg., Oct. 26, 2009, Tax Analysts Doc. 2009- 24267
(approved by Law No. 26750, promulgated June 6, 2012, Boletín ofICIal
(June 7, 2012), https:// www . boletinoficial . gob . ar / detalleAviso / primera / 70670
/ 20120607).
71. Agreement Between the Government of the Argentine Repub-
lic and the Government of the Republic of Armenia on Exchange of Informa-
tion on Tax Matters, Arg.- Arm., July 7, 2014, Tax Analysts Doc. 2014- 16920.
72. Agreement Between the Argentine Republic and the Kingdom
of the Netherlands, in Respect of Aruba, for the Exchange of Information
with Respect to Taxes, Arg.- Aruba, Sept. 30, 2013, Tax Analysts Doc. 2013-
24052.
73. Agreement Between the Argentine Republic and the Republic
of Azerbaijan on the Exchange of Tax Information, Arg.- Azer., Dec. 17, 2012,
Tax Analysts Doc. 2013- 3851.
74. Agreement Between the Commonwealth of the Bahamas and
the Argentine Republic for the Exchange of Information on Tax Matters,
Bah.- Arg., Dec. 3, 2009, Tax Analysts Doc. 2009- 26640 (approved by Law
No. 26748, promulgated June 6, 2012, Boletín ofICIal (June 7, 2012), https://
www . boletinoficial . gob . ar / detalleAviso / primera / 70666 / 20120607).
75. Agreement Between Bermuda and the Argentine Republic for
the Exchange of Information Relating to Taxes, Berm.- Arg., Aug. 22, 2011,
Tax Analysts Doc. 2011- 18395.
76. Acuerdo de Intercambio de Informaciones Tributarias y
Aduaneras Argentina- Brasil, Arg.- Braz., Apr. 21, 2005, http:// afip . gob . ar
/ institucional / Documentos / acuerdos / ac . impadua . brasil . pdf; see also David
928 Florida Tax Review [Vol 22:3
Islands (in force),
77
Chile (not in force),
78
China (in force),
79
Costa Rica
(in force),
80
Curaçao (in force),
81
Ecuador (in force),
82
Guernsey (in
Roberto R. Soares da Silva, Brazil, Argentina Sign Agreement on Exchange
of Tax Information, Tax Analysts Doc. 2005- 8721 (Apr. 27, 2005).
77. Agreement Between the Cayman Islands and the Republic of
Argentina on Exchange of Information on Tax Matters, Cayman Is.- Arg.,
Oct. 18, 2011, Tax Analysts Doc. 2011- 22451.
78. Acuerdo de Intercambio de Informaciones Tributarias, Arg.-
Chile, Oct. 24, 2006, http:// afip . gob . ar / institucional / Documentos / acuerdos
/ AcuerdoCHILE . pdf; see OECD, Global Forum on Transparency and
Exchange of Information for Tax Purposes Peer Reviews: Argentina 92
(Nov. 2013), https:// doi . org / 10 . 1787 / 9789264205505 - en [hereinafer Argen-
tina: OECD Global Forum]. Chile considered that this agreement ceased to
be in force when Argentina terminated the DTC. See López- Sansón &
Morera- Martínez, supra note 43; ey tax InsIgHts, supra note 52. Even
though there is a new DTC in force used to exchange tax information. Supra
note 58 and accompanying text.
79. Agreement Between the Government of the Argentine Repub-
lic and the Government of the People’s Republic of China for the Exchange of
Information Relating to Taxes, Arg.- China, Dec. 13, 2010, Tax Analysts Doc.
2011- 4718.
80. Acuerdo para el Intercambio de Información en Materia Tribu-
taria entre la República Argentina y la República de Costa Rica, Arg.- Costa
Rica, Nov. 23, 2009, Tax Analysts Doc. 2009- 26034 (approved by Law
No. 26,747, promulgated June 6, 2012, Boletín ofICIal (June 7, 2012), https://
www . boletinoficial . gob . ar / detalleAviso / primera / 70668 / 20120607).
81. Agreement Between the Kingdom of the Netherlands, in
Respect of Curaçao, and the Argentine Republic for the Exchange of Informa-
tion with Respect to Taxes, Curaçao- Arg., May 14,2014, Tax Analysts Doc.
2014- 13601.
82. Convenio de Cooperacón y Asistencia Administrativa Mutua e
Intercambio de Información Tributaria entre el Servicio de Rentas Internas y
la Adminstración Federal de Ingresos Públicos, Arg.- Ecuador, May 23, 2011,
Tax Analysts Doc. 2011- 13062.
2019] Is Argentina Ready for the New International Tax Era? 929
force),
83
India (in force),
84
Ireland (in force),
85
Italy (in force),
86
Isle of
Man (in force),
87
Jersey (in force),
88
Macao (in force),
89
Macedonia (in
83. Agreement Between the States of Guernsey and the Argentine
Republic for the Exchange of Information Relating to Tax Matters, Guernsey-
Arg., July 28, 2011, Tax Analysts Doc. 2011- 16746.
84. Agreement Between the Government of the Argentine Repub-
lic and the Government of the Republic of India for the Exchange of Informa-
tion and Assistance in Collection with Respect to Taxes, Arg.- India, Nov. 21,
2011, Tax Analysts Doc. 2012- 6661.
85. Agreement Between Ireland and the Argentine Republic for
the Exchange of Information Relating to Tax Matters, Ir.- Arg., Oct. 29, 2014,
Tax Analysts Doc. 2014- 26799.
86. Memorándum de Entendimento Sobre Cooperación e Inter-
cambio de Información Entre la Administractión Federal de Ingresos Públi-
cos (AFIP) y la Guardia di Finanza de la República Italiana, Arg.- It., Oct.
15, 2010, http:// afip . gob . ar / institucional / Documentos / acuerdos / Acuerdo%20
%20 con%20Guardia%20Di%20Finanza - Italia . pdf; see also Larissa Hoag-
land, Argentina, Italy Sign TIEA, Tax Analysts Doc. 2010- 22825 (Oct. 21,
2010).
87. Agreement Between the Isle of Man and the Argentine Repub-
lic for the Exchange of Information Relating to Tax Matters, Isle of Man- Arg.,
Dec. 14, 2012, Tax Analysts Doc. 2012- 25860.
88. Agreement Between Jersey and the Argentine Republic on the
Exchange of Information Relating to Tax Matters, Jersey- Arg., July 28, 2011,
Tax Analysts Doc. 2011- 16764.
89. Agreement Between the Argentine Republic and the Macao
Special Administrative Region of the People’s Republic of China for the
Exchange of Information Relating to Taxes, Arg.- Macao, Sept. 5, 2014, Tax
Analysts Doc. 2014- 23272.
930 Florida Tax Review [Vol 22:3
force),
90
Monaco (in force),
91
Peru (in force),
92
San Marino (in force),
93
South Africa (in force),
94
Spain (not in force),
95
Turkmenistan (in force),
96
90. Agreement Between the Argentine Republic and the Republic
of Macedonia on Exchange of Information on Tax Matters, Arg.- Maced.,
Apr. 26, 2013, Tax Analysts Doc. 2013- 11770.
91. Agreement on the Exchange of Tax Information Between the
Republic of Argentina and the Principality of Monaco, Arg.- Monaco, Oct. 13,
2009, Tax Analysts Doc. 2012- 15286.
92. Acuerdo de Entre las Administraciones Tributarias de la
República de Argentina y de la República del Perú para la Cooperación Técnica
e Intercambio de Información Tributaria y Aduanera, Arg.- Peru, Oct. 7, 2004,
http:// afip . gob . ar / institucional / Documentos / acuerdos / ac . impadua . peru . pdf; see
also Argentina: OECD Global Forum, supra note 78, at 65, 68, 72, 75, 94.
93. Agreement Between the Republic of San Marino and the
Republic of Argentina Concerning Exchange of Information on Tax Matters,
San Marino- Arg., Dec. 7, 2009, Tax Analysts Doc. 2011- 18564 (approved by
Law No. 26749, promulgated June 6, 2012, Boletín ofICIal (June 7, 2012),
https:// www . boletinoficial . gob . ar / detalleAviso / primera / 70672 / 20120607).
94. Agreement Between the Argentine Republic and the Republic
of South Africa for the Exchange of Information Relating to Tax Matters,
Arg.- S. Afr., Aug. 2, 2013, Tax Analysts Doc. 2013- 20288.
95. Acuerdo de Intercambio de Información Tributaria Argentina-
España, Arg.- Spain, May 7, 2004, http:// afip . gob . ar / institucional / Documentos
/ acuerdos / AcuerdoEspa%C3%B1a . pdf; see also Argentina: OECD Global
Forum, supra note 78, at 59, 94. Spain considered that this agreement ceased
to be in force when Argentina terminated the DTC. Argentina: OECD Global
Forum, supra note 78, at 17, 57; see also López- Sansón & Morera- Martínez,
supra note 43. Even though there is a new DTC in force, supra note 56 and
accompanying text, which is commonly used to exchange tax information.
96. Agreement Between the Government of Turkmenistan and the
Government of the Argentine Republic on Exchange of Information on Tax
Matters, Turkm.- Arg., Apr. 27, 2017, Tax Analysts Doc. 2017- 4508.
2019] Is Argentina Ready for the New International Tax Era? 931
United Arab Emirates (in force),
97
United States of America (in force),
98
Uruguay (in force),
99
and Venezuela (in force).
100
The head of the federal tax authorities is empowered to execute
information exchange agreements with foreign tax authorities. This is
because tax secrecy does not apply when the federal tax authorities dis-
close information to foreign tax authorities, according to Argentina’s
Tax Procedure Law.
101
Moreover, Argentina has committed to exchange
financial information on an automatic basis. In this sense, Argentina
has also committed to apply the common reporting standard (CRS) and
signed the Multilateral Competent Authority Agreement on Automatic
Exchange of Financial Account Information (MCAA).
102
Argentina is
97. Agreement Between the Argentine Republic and United Arab
Emirates on Exchange of Information on Tax Matters, Arg.- U.A.E., Feb. 5,
2016, Tax Analysts Doc. 2016- 22212.
98. Agreement Between the Government of the United States of
America and the Government of the Argentine Republic for the Exchange of
Information Relating to Taxes, U.S.- Arg., Dec. 23, 2016, Tax Analysts Doc.
2017- 1251.
99. Acuerdo entre la Republica Argentina y la Republica Oriental
del Uruguay para el Intercambio de Información Tributaria y Método para
Evitar la Doble Imposición, Arg.- Uru., Apr. 23, 2012, Tax Analysts Doc.
2012- 8808 (approved by Law No. 26758, promulgated Aug. 21, 2012, Boletín
ofICIal (Aug. 22, 2012), https:// www . boletinoficial . gob . ar / detalleAviso
/ primera / 74265 / 20120822).
100. Acuerdo Entre las Administraciones Aduaneras y Tributarias
de la Repúblic Argentina- Administración Federal de Ingresos Públicos
(AFIP) y la República Bolivariana de Venezuela- Servicio Nacional Integrado
de Administración Aduanera y Tributaria (SENIAT) para la Cooperación
Técnica e Intercambio de Información Aduanera y Tributaria, Arg.- Venez.,
Feb. 18, 2014, http:// afip . gob . ar / institucional / Documentos / acuerdos / acuerd
oconvenezuela . pdf.
101. Tax Procedure Law, Law No. 11683, § 101 point d, Boletín
ofICIal (Jan. 12, 1933), as amended by Law No. 25795, Boletín ofICIal
(Nov. 17, 2003), https:// www . boletinoficial . gob . ar / detalleAviso / primera / 725777
1 / 20031117 ? busqued a =1.
102. Argentina signed the Multilateral Convention on Mutual
Administrative Assistance on Tax Matters on Nov. 3, 2011, ratified on Sept.
13, 2012, and the entry into force was Jan. 1, 2013. Jurisdictions Participating
in the Convention on Mutual Administrative Assistance in Tax Matters,
OECD, https:// www . oecd . org / tax / exchange - of - tax - information / Status_of_con
vention . pdf (last updated July 22, 2020). Argentina has also committed to start
932 Florida Tax Review [Vol 22:3
an early adopter and started to exchange information of financial
accounts on an automatic basis on September 2017.
For purposes of implementing CRS at the local level, the fed-
eral tax authorities enacted General Resolution 3826/2015,
103
by which
financial institutions are obliged to identify the beneficial owners of the
accounts held by non- residents, and together with certain information,
provide it to the tax authorities for further automatic exchange.
It is also worth mentioning that following the Peer Review
Report, prepared by the Global Forum in 2013, Argentina exchanged
information on an automatic basis with four countries and spontaneously
to a lesser extent (less than 10 exchanges in 2011). Exchanges on an auto-
matic basis were limited to information related to payment of passive
income (dividends, interests, royalties, and rents). Argentina’s most
common information exchange partners include Spain, Brazil, Chile,
Canada, Italy, France, Netherlands, and the United Kingdom. In addi-
tion, the Peer Review Report prepared by the Global Forum in 2013
104
concluded that, as of August 2012, the legal and regulatory framework
for the availability of information in Argentina was in place.
As to information exchange with the United States, Argentina
has not signed an IGA yet, but it did sign an information exchange agree-
ment with the United States on December 23, 2016,
105
that may serve as
a first step prior to the execution of an IGA. Thus, there are no imple-
mentation regulations related to this subject yet. The agreement between
Argentina and the United States entered into force on November 13,
2017, and became effective as from January 1, 2018.
106
In this regard, Argentine tax authority officials have informally
explained in early 2019 that they are negotiating an IGA with the IRS.
Also, U.S. Treasury has announced that Argentina is one of the
exchanging information on automatic basis starting September 2017. See
Country Monitoring, OECD, http:// www . oecd . org / tax / transparency / country
- monitoring / (last visited Dec. 10, 2020).
103. Resolución General 3826, Boletín ofICIal (Dec. 30, 2015),
https:// www . boletinoficial . gob . ar / detalleAviso / primera / 139129 / 20151230,
amended by Resolución General 4056- E, Boletín ofICIal (May 22, 2017),
https:// www . boletinoficial . gob . ar / detalleAviso / primera / 164002 / 20170522.
104. Argentina: OECD Global Forum, supra note 78 (reflecting the
legal and regulatory framework as at Aug. 2012).
105. Supra note 98 and accompanying text.
106. Supra note 98 and accompanying text.
2019] Is Argentina Ready for the New International Tax Era? 933
countries with which it is actively engaged in a dialogue toward con-
cluding an IGA. There are no statistics regarding increase in revenue
attributable to the exchange of information, as well as there is no data
about reduction of tax related crimes (such as evasion, money launder-
ing) or any other measurable or foreseeable gains as a result of this
legislation.
A real measure of the effect of transparency was the success of
the latest tax amnesty program. The change of government in 2015 and
the potential entry into force of the CRS MCAA, of which Argentina
became an early adopter, created the perfect scenario for a tax amnesty,
also following the worldwide trend. In 2016, one year before Argentina
would start receiving information, on an automatic basis, through the
application of the CRS MCAA, Congress enacted a tax amnesty law.
107
The consequence of this tax amnesty program was the second
largest disclosure worldwide.
108
More than 254,700 taxpayers
109
disclosed
assets for US $116,800 million. Most of the disclosed assets were pas-
sive income- producing assets
110
located abroad.
111
107. Law No. 27260, July 22, 2016, Boletín ofICIal (July 22, 2016),
https:// www . boletinoficial . gob . ar / detalleAviso / primera / 148428 / 20160722;
Argentina Publishes Legislation on Voluntary Disclosure, Tax Settlement,
Eliminating Dividends Withholding Tax, and Other Measures, orBItax,
https:// www . orbitax . com / news / archive . php / Argentina - Publishes - Legislatio
- 21148 (last visited Sept. 7, 2020).
108. The biggest one was Indonesia for US $330,000 million. Indo-
nesia Tax Amnesty Nets $330 Bln— Now for Reform, CNBC (Mar. 21, 2017),
https:// www . cnbc . com / 2017 / 03 / 21 / indonesia- tax- amnesty- nets- 330- bln— now
- for- reform.html.
109. 96% were individuals and only 4% legal entities. See El Since-
ramiento Fiscal Superó los 116 mil Millones de Dólares, goBIerno arg� (Apr. 4,
2017), https:// www . minhacienda . gob . ar / el - sinceramiento - fiscal - supero - los - 116
- mil - millones - de - dolares / .
110. US $90 million, out of the US $98 million located abroad,
were equities (listed or private), bonds, funds (US $55 million), cash in bank
accounts (US $25,000 million) and real estate (US $10,000 million). The rest
were cars, ships, planes, art, and jewelry. See id.
111. The United States and Switzerland concentrated more than
50% of the total disclosed assets located abroad. See id.; Sinceramiento Fis-
cal: Se Exteriorizaron U$S 116.800 Millones, CpCe CordoBa (Apr. 4, 2017),
https:// cpcecba . org . ar / noticias ? idn=12360.
934 Florida Tax Review [Vol 22:3
IV. ArgentIne cfc rules
One of the main changes of the latest tax reform implemented in 2017
was the amendment of Argentina’s CFC Rules. Argentine Income
Tax Law (ITL)
112
applied only to Argentine source income until 1992
when Article 1 was amended, and residents were subject to worldwide
taxation. However, it was not until the late 1990s that several amend-
ments were introduced to the ITL over a couple of years
113
and the
worldwide principle was effectively applicable. These changes included
the first piece of CFC Rules. It has been said that “the general policy
objectives pursued by the tax reform were to prevent the diversion of
passive income to CFC’s organized in tax haven and to avoid the accu-
mulation of such income there.”
114
The ITL prevented deferral in two specifics cases, combining a
“jurisdictional approach” with an “entity approach.”
115
Argentine
residents— individuals or legal entities— holding equity participations
in foreign legal entities would recognize income on a current basis in
the following cases:
Only the passive income should be recognized as taxable income
if: (1) the capital of the foreign legal entity were represented in shares;
(2) the foreign legal entity was incorporated or domiciled in a low or no
tax jurisdiction— listed in the regulatory decree of the ITL; and (3) more
than 50% of the income obtained by the foreign legal entity in such fis-
cal year was considered passive (i.e., rents, dividends, interests, royal-
ties, among others).
All the income would be recognized as taxable income if the
capital of the foreign legal entity were not represented in shares.
112. Law 20628, Boletín ofICIal (Dec. 31, 1973), as reorganized
by Decreto 649/97, Boletín ofICIal (Aug. 6, 1997), https:// www . boletinoficial
. gob . ar / detalleAviso / primera / 7169578 / 19970806.
113. Law 25063, Boletín ofICIal (Dec. 30, 1998), https:// www
. boletinoficial . gob . ar / detalleAviso / primera / 7190749 / 19981230; Law 25239,
Boletín ofICIal (Dec. 31, 1999), https:// www . boletinoficial . gob . ar
/ detalleAviso / primera / 7202544 / 19991231; Decreto 290/2000, Boletín ofICIal
(Apr. 3, 2000), https:// www . boletinoficial . gob . ar / detalleAviso / primera / 720
4448 / 20000403.
114. Juan Carlos Vicchi, San Francisco IFA Congress: Argentina
Report, 86 CaHIers dU droIt Int’l 329 (2001).
115. Walter Keiniger, Copenhagen IFA Congress: Argentina
Report, 98 CaHIers dU droIt Int’l 77 (2013).
2019] Is Argentina Ready for the New International Tax Era? 935
Under the old system the concept of control was irrelevant. The
legislation did not include a minimum threshold, which posed a practi-
cal problem for Argentine residents holding small percentages in for-
eign entities with respect to which they lacked information. In 2013
Argentina moved from a blacklist to a whitelist.
116
This meant eliminat-
ing the tax haven list included originally in the ITL’s regulatory decree.
117
This new white list was going to be published yearly by the Argentine
Federal Tax Authority (AFIP). The procedure was never clear. The first
year the list was published directly on the tax authorities’ website and
only included the jurisdictions with which Argentina had information
exchange agreements in place.
118
The combination of the recently enacted whitelist system meant
that the old CFC Rules had almost no practical application. For exam-
ple, an Argentine resident was able to defer passive income simply by
placing all of its passive income- producing assets in a share corpora-
tion domiciled in the British Virgin Islands, Cayman Islands, or Ber-
muda.
119
CFC Rules were very easily avoided because of the switch from
a blacklist to a whitelist but also because Argentine residents disclosed
few assets abroad (less than U.S. $20,000 million).
Following the tax amnesty, Argentina increased exponentially
the numbers of taxpayers holding passive income producing assets,
116. Decreto 589/2013, Boletín ofICIal (May 30, 2013), https://
www . boletinoficial . gob . ar / detalleAviso / primera / 88528 / 20130530.
117. Decreto 1344/1998, Boletín ofICIal (Nov. 25, 1998) https://
www . boletinoficial . gob . ar / detalleAviso / primera / 7188909 / 19981125 ? bus
queda=2.
118. The white list was not very thorough but was improved over
the years. The first white list did include Paraguay or Venezuela, with which
Argentina had no information exchange agreements but were— and are—
very important business partners and Mercosur members. The Income Tax
Law included several negative tax consequences for doing business with
counterparties in jurisdictions not included in the white list. See Jurisdic-
ciones Cooperantes y No Cooperantes, AFIP, http:// www . afip . gob . ar / jurisdic
cionesCooperantes / # ver (last visited Sept. 12, 2020).
119. Most offshore jurisdictions had been included in the white list
because they had an information exchange agreement with Argentina or had
promised to execute one or to adhere to the CRS MCAA. The guidelines for
the list were provided by Resolución General 3576, Boletín ofICIal (Dec. 31,
2013), https:// www . boletinoficial . gob . ar / detalleAviso / primera / 100023 / 20131231
? busqueda=2.
936 Florida Tax Review [Vol 22:3
which could enjoy tax deferral by holding those assets though an off-
shore company with the sole condition that its capital had to be repre-
sented in shares. In late 2017, Argentine Congress passed a comprehensive
tax reform,
120
including a substantial reform of the CFC Rules. The old
regulations applied a combination of rules to attribute income to the
Argentine resident shareholder. In the case of foreign branches and per-
manent establishments, income and expenses were attributed directly
as if earned/made by the Argentine resident taxpayer itself. However,
for foreign entities with capital not represented by shares, incorporated
or domiciled in any foreign jurisdiction, their net income obtained at
the end of their fiscal year was automatically attributed to the Argentine
resident partner, applying a deemed dividend approach. For foreign
entities with capital represented by shares, incorporated or domiciled
in tax havens, that had 50% of passive income, also a deemed divi-
dend approach applied but limited to passive income.
The new CFC Rules are quite innovative in this sense because
they seem to apply a deemed dividend combined with a partial veil-
piercing approach, understood in a way that only the existence of
income— the occurrence of the taxable event— is defined at the level of
the foreign entity. However, the new CFC Rules include a final
paragraph— applicable to all relevant CFC situations— stating that the
category of income, determination of net income, foreign exchange con-
version, and tax rates will be the ones applicable to the Argentine resi-
dent to which the income is attributed as if obtained directly by him.
121
The CFC Rules apply to both individuals and legal entities as sharehold-
ers of foreign companies. However, this rule has many practical differ-
ences because there are several situations in which the tax treatment for
individuals and legal entities differ substantially.
As an example, ordinary income and capital gains are taxed at
the same rate
122
if obtained by legal entities. Capital gains obtained by
120. Law 27430, Boletín ofICIal (Dec. 29, 2017), https:// www
. boletinoficial . gob . ar / detalleAviso / primera / 176831 / 20171229; see also Argen-
tina Enacts Comprehensive Reform, ey gloBal tax alert (Dec. 29, 2017),
https:// www . ey . com / Publication / vwLUAssets / Argentina_enacts_compre-
hensive_tax_reform / $FILE / 2017G_07182 - 171Gbl_Argentina%20enacts%20
comprehensive%20tax%20reform . pdf.
121. Income Tax Law art. 133, as amended by Law 27430, supra
note 120.
122. 30% for 2019 and 25% from 2020 onward. Id. ar t. 69.
2019] Is Argentina Ready for the New International Tax Era? 937
individuals are taxed at 15% and ordinary income at progressive rates
ranging from 5% to 35%.
123
Income obtained by legal entities is taxed
on an accrual basis. In the case of individuals, it may be on an accrual
or cash basis, depending on the type and category of income. Another
major difference is the foreign exchange differences, which is always
taxed in the hands of legal entities but exempted for individuals in cer-
tain cases.
The new rules construe that a foreign entity will be considered
a CFC in the following two situations. The first case refers to foreign
companies or legal entities (except trusts and foundations that have a
specific tax treatment) that lack fiscal personality.
124
The regulations
125
explain that a company or legal entity will be deemed to lack fiscal per-
sonality when it is not considered liable for tax by the income tax—
analogous to the Argentine income tax— in place in the jurisdiction in
which it is incorporated, domiciled, or placed.
The second case includes any other company or legal entity,
excluding trusts and foundations— that have a specific treatment— and
entities with no tax personality, with respect to which the following three
requirements are concurrently met:
Control: this requirement will be considered met if an Argen-
tine resident has voting or economic rights of 50% or more. Any inter-
est held by the spouse, cohabiting partner, or any third- degree relative or
any company in which such person has control or is related to, will
be added for purposes of calculating the 50%. This requirement will
also be considered met if the Argentine resident holds less than 50%
but: (i) has the right, in any way, to dispose or decide on the disposal
assets of the legal entity, (ii) has the right to appoint the majority of the
directors, administrators, or deciding members of the administration
boards or bodies, (iii) has the right to remove the majority of the direc-
tors or administrators, (iv) has a current right on the benefits of the legal
entity, (v) if at any moment during the financial year the foreign entity
has financial assets that produce Argentine source passive income,
123. Id. art. 90.
124. Id. art. 133.e.
125. Decreto Reglamentario 1344/98, art. 165(VI).2, http://
servicios . infoleg . gob . ar / infolegInternet / verNorma . do ? id=54488 [hereinafter
Income Tax Regulatory Decree].
938 Florida Tax Review [Vol 22:3
exempt from Argentine income tax, that represent 30% or more of it
total assets.
126
The control test has several situations that are open for inter-
pretation and have not been clarified in the regulations. For example,
it is not clear what “related” means when testing if the Argentina
resident holds a percentage in the CFC through another legal entity
or what having “a current right on the benefits of the legal entity”
means. These, among other issues, need further guidance from the
tax authorities.
Substance and passive income: this requirement will be consid-
ered met if (1) the foreign entity does not have the necessary material
and personal means to perform its activity, (2) 50% or more of its
income is considered passive, or (3) its income causes— directly or
indirectly— deductions to an Argentine tax resident related party.
127
The
regulations
128
explain that the foreign entity will be considered to meet
the substance requirement if it can be effectively proved that the orga-
nization has valid economic motivation and is adequate, in terms of
infrastructure, assets, quantity and quality of personnel, to perform the
business or activities.
Also, if the material and personnel means organized by the
foreign entity are not enough, the requirement will be deemed met if
the substance is provided by a foreign third party: (1) related to Argen-
tine tax resident shareholder of the foreign entity, or (2) unrelated but
incorporated, domiciled, or placed in the same jurisdiction in which
the foreign entity is located, as long as such jurisdiction is not non-
cooperative or a tax haven for Argentine income tax purposes.
The regulations
129
include an exhaustive list of what is consid-
ered passive income:
(i) dividends and any form of distribution of profits derived
from an equity participation, except dividends distributed by
companies in which the CFC has direct or indirect control and
the majority of its income derives from active income.
126. Income Tax Law art. 133.f.2, as amended by Law 27430,
supra note 120.
127. Id. art. 133.f.3.
128. Income Tax Regulatory Decree, supra note 125, art. 165(VI).5.
129. Id. art. 165(VI).6.
2019] Is Argentina Ready for the New International Tax Era? 939
(ii) interests, except the CFC is a financial entity regulated by
the local relevant authority in the jurisdiction in which it is
incorporated, domiciled or placed, or the interests derive from
loans between related parties of the same economic group,
always that an Argentine entity is not directly or indirectly
linked to the transaction.
(iii) royalties, except the CFC can prove that the asset produc-
ing the royalty was totally or substantially developed by the
recipient.
(iv) rents of real estate, except the CFC’s principal activity is
renting real estate.
(v) income derived from insurance activities in case the benefi-
ciary is the CFC, except it is regulated by the local authority in
the jurisdiction in which it is incorporated, domiciled, or placed.
(vi) income derived from derivative transactions, except hedg-
ing and foreign exchange transactions.
(vii) income derived from trading of shares, equity participa-
tions, bonds, digital currencies, except the CFC is a financial
entity regulated by the local relevant authority in the jurisdic-
tion in which it is incorporated, domiciled, or placed
(viii) income derived from the sale of assets or rights that pro-
duce any of the income mentioned above.
Effective taxation: this requirement will be considered met if
the foreign entity pays income tax— analogous to the Argentine income
tax— in the country in which the entity is incorporated, domiciled, or
placed, attributable to the income mentioned in (b) equivalent to less
than 75% of the income tax that would have been paid under the Argen-
tine income tax law. This requirement is deemed to be met— with no
possibility of proving to the contrary— if the foreign entity is incorpo-
rated, domiciled, or placed in a non- cooperative or tax haven jurisdic-
tion.
130
If the foreign entity is deemed a CFC because it lacks fiscal
130. Income Tax Law art. 133.f.4, as amended by Law 27430, supra
note 120.
940 Florida Tax Review [Vol 22:3
personality, CFC shall be disregarded for Argentine tax purposes, so a
total look through approach applies. The ownership percentage is irrel-
evant, so even a shareholder holding 1% of the foreign entity should
report its proportion of the income earned by the foreign entity. Also,
all income earned by the CFC shall be attributed; there is no distinction
between active or passive income.
However, if the foreign entity is deemed a CFC because the
three requirements explained above are met, a combination of deemed
dividend and veil piercing applies. If the CFC has no substance both
active and passive shall be attributed. However, if the CFC has substance
only passive income shall be attributed.
The situation gets complicated when a combination of entities
interact because both CFC tests— together with the test that will be
explained below applicable to trusts and foundations— must be per-
formed down the corporate chain. CFC Rules potentially apply to all
lower- tier subsidiaries. This means that the two CFC situations— fiscal
personality and control, substance/passive income and effective
taxation— have to be tested at each lower- tier subsidiary.
The new CFC Rules also target foreign trusts, private founda-
tions, or other similar legal entities, structures, or arrangements that have
as the main purpose the administration of assets.
131
The income obtained
by this group must be attributed to the Argentine tax resident that has
control in the year in which it is earned. The same article explains that
an Argentine tax resident will be deemed to have control if it can be
construed that the financial assets are under the power and/or are admin-
istered by such a person. The following situations, among others, will
be considered examples of control: (a) if the trust or foundation are revo-
cable, (b) if the settlor or grantor is also beneficiary, (c) when that per-
son has direct or indirect power to invest or disinvest. Even though it
seems that only income derived from financial assets should be
attributed, the regulatory decree clarifies that it is income derived from
any asset.
132
The first draft of the bill that was sent to Congress included a
reference to the control tests applicable to companies mentioned above.
The way it worked was that the settlor or beneficiary would be deemed
to have control in the case of a trust if they had power to appoint or
remove the majority of the administrators, dispose of the assets, or
131. Id. art. 133.d.
132. Income Tax Regulatory Decree, supra note 125, art. 165(VI).1.
2019] Is Argentina Ready for the New International Tax Era? 941
have a current right on the income. The reference was removed from
the draft bill while being discussed in the committees. This meant that,
in principle, the concept of control for trust purposes was narrower.
133
However, the regulatory decree included the reference back.
134
The CFC Rules related to companies apply to all lower- tier sub-
sidiaries owned by a trust, foundation, or similar arrangement. This
means that if a trust is deemed a CFC, the CFC Rules must be tested at
the first- tier companies owned directly by such trust and so on. All the
rules regarding attribution, computation, and tax credit are exactly the
same for CFC companies or trusts, foundations, or similar
arrangements.
The old CFC rules had no practical application. The new CFC
Rules applied for the first time to the 2018 fiscal year, which filings
were due July 2019 so the actual effect cannot be measured. However,
an increase in revenues should be expected.
V. ArgentInA’s ApproAch towArd tAxAtIon of dIgItAl economy
Argentina’s rules were not prepared to tax income derived from digital
economy. In the past, the old source rules were wrongly used by the tax
authorities to attack certain situations. In the Amadeus cases, several
local airlines paid Amadeus to access software that processed reserves
and issued air tickets. The Argentine income tax law considers that
income derived from assets located abroad but economically used in
Argentina and from services rendered abroad deemed technical are from
Argentine source. The Argentine tax authorities used different argu-
ments, considering the payment a royalty for the use of an intellectual
property, a fee for a technical service, and even a service economically
used in Argentina.
135
Unfortunately, our Courts agreed with the tax
authorities’ position,
136
which definitely forced the interpretation of the
at- that- time current rules to tax B2B digital economy situations.
133. This conclusion was arguable because the scenarios of control
were considered simple presumptions and examples, not an exhaustive list.
134. Income Tax Regulatory Decree, supra note 125, art. 165(VI).8.
135. This concept is not even part of the income tax law, but a con-
cept extracted from the value added tax law, applicable for import of services.
136. The Amadeus case includes several cases decided by the Tax
Court and Federal Court of Appeals: Decision of the Tribunal Fiscal de la
Nación, sala D, May 12, 2004 (case Aerolíneas Argentinas SA); Decision of
942 Florida Tax Review [Vol 22:3
However, B2C digital economy situations were not aimed at by
the tax authorities until very recent years, initially by provinces and
finally by the federal government with the 2017 tax reform. Argentina
amended its value added tax law to include a new taxable event with
respect to digital services provided by a person resident or domiciled
abroad, where effective use or exploitation is carried out in the country,
as long as the user is not registered in the VAT. B2B transactions were
already subject to VAT under the old law, considering that the applica-
tion of the tax depended on the local person using the service to be
registered.
In this sense, the law specifies that digital services are deemed,
regardless of the device used for downloading, viewing, or using them,
as those carried out through the internet or any adaptation or applica-
tion of the protocols, the platforms, or the technology used by the inter-
net, or another network through which equivalent services are provided,
which by their nature, are basically automated and require minimal
human intervention. Also included was a non- exhaustive list of the most
common digital services and an exemption for the access and down-
load of digital books. The law further explains that the VAT liability
relies on the Argentine recipient or customers, who will be responsi-
ble for assessing and paying the tax on the net price of the transaction
arising from the foreign provider’s invoice, under the mechanism terms
and conditions to be established by the tax authorities. In B2C transac-
tions involving intermediaries who intervene in the payment of the ser-
vice (e.g., banks, e- marketplaces), the law specifies that they will be
obliged to act as withholding agents.
Regarding the determination of the jurisdiction of “effective use
or exploitation” of the service, the law provides that the jurisdiction in
which that occurs is “that in which the immediate use or the first act
of disposition of the service by the customer occurs,” even if the latter
the Cámara Nacional de Apelaciones, sala I, Feb. 5, 2008 (case Aerolíneas
Argentinas SA); Decision of the Tribunal Fiscal de la Nación, Sala A, Feb. 6,
2007 (case Austral Líneas Aéreas Cielos del Sur SA); Decision of the Cámara
Nacional de Apelaciones, Sala V, June 2, 2009 (case Austral Líneas Aéreas
Cielos del Sur SA). For an overview of these cases, see Los Pagos Realizados
en Concepto de Uso de Sistemas Automatizados de Reservas a Beneficiarios
del Exterior, el CronIsta (Mar. 12, 2012), https:// www . cronista . com / fiscal
/ Los - pagos - realizados - en - concepto - de - uso - de - sistemasautomatizados - de
- reservas - a - beneficiarios - del - exterior - 20120312 - 0013 . html.
2019] Is Argentina Ready for the New International Tax Era? 943
uses it for its consumption. It further establishes as a non- rebuttable pre-
sumption that there is an “effective use or exploitation” of the digital
service in Argentina when either: (1) the IP address (for services
received through computers, tablets) or the SIM card country code
(services received through mobile phones) is located in Argentina; (2)
the billing address of the client is in Argentina; (3) the bank account
used for the payment or the issuing of the credit or debit card used to
make the payment are located in Argentina. As to direct taxes, the draft
bill of the 2017 tax reform included an article that expanded the source
principle by taxing income derived from digital services provided
through the internet or any adaptation or modification of the protocols
platforms or technology used by the internet or another network through
which equivalent services are provided, specifying these constitute net
gain of Argentine source, when the service is economically used in the
countr y.
137
This type of income was taxed at a 17.5% effective tax rate.
This proposal was finally eliminated from the draft bill and no amend-
ments were made to the income tax law.
138
The permanent establishment article included in the income tax
law was also amended and aligned with the OECD standard, but income
derived from digital economy was not addressed. It could be argued that,
as of 2019, Argentina does not impose direct taxes on income derived
from digital economy. This criterion was confirmed in two cases in
which the tax authorities were of the opinion that payments made by an
Argentine resident for the use of servers abroad and for advertising ser-
vices rendered from abroad were not subject to tax in Argentina.
Argentina is in the process of becoming a member of the OECD,
so it has followed the recommendation of not adopting unilateral mea-
sures. This has been the position of the federal government. However,
many Argentine provinces have acted differently.
The federal government and the provinces have a co-
participation agreement by which they divide the tax revenue derived
from income tax and VAT— and other taxes— imposed and collected by
the federal government and, in turn, the provinces agree not to impose
137. See Law 27430: Reform del Sistema Trubutario Argentino,
Debates de Law Leyes 27.001 a la Actualidad, goBIerno arg�, https:// www
. diputados . gob . ar / secparl / dgral_info_parlamentaria / dip / debates / leyes_27000
. html (downloadable zip folder containing all the congressional discussion, orig-
inal draft, and changes to Law 27430).
138. Law 27430, supra note 120.
944 Florida Tax Review [Vol 22:3
taxes similar to those. This agreement does not leave room for provinces
to do much, but they have proven to be very creative. The gross turn-
over tax, together with the property tax, account for most of the prov-
inces’ tax revenues. In this context, many provinces have attempted to
tax digital economy with the gross turnover tax. The main challenges
that the gross turnover tax, pretending to tax digital economy,
will face are: (1) constitutional interpretation of the territoriality or
nexus principle, (2) characteristics of the gross turnover tax agreed in
the co- participation law, and (3) prohibition of analogy agreed in the
co- participation law.
A first group of provinces
139
has tried to tax digital services with
their traditional gross turnover tax, just by including digital services pro-
vided by a foreign person in the taxable event. A second group of prov-
inces
140
has included the place of effective use or consumption as nexus
or connection point. A third group of provinces
141
has included a con-
cept of significant digital presence as nexus or connection point.
VI. conclusIons
In recent years Argentina has been an excellent student and has followed
all OECD and G20 recommendations. The attitude of the provinces are
the exception, but, of course, the federal government has limited power
to force them to be aligned. Considering the economic and fiscal crisis
that Argentina is facing, the federal government has no room to bargain
with the provinces.
The expansion of the tax treaty network and alignment with
OECD recommendations has not resulted in any immediate benefit to
Argentina. But, as discussed in depth by some authors, the relationship
139. The city of Buenos Aires (assimilated to a province in the Con-
stitution) and Santa Fe. CódIgo fIsCal 2019 art. 177 bis, http:// www2 . cedom . gob
. ar / es / legislacion / normas / codigos / fiscal / index3 . html (Buenos Aires); Impuesto
Sobre los Ingresos Brutos art. 177, https:// www . santafe . gov . ar / index . php / web
/ content / download / 213216 / 1105413 / file / Impuesto%20sobre%20los%20
Ingresos%20Brutos%20_T%C3%ADtulo%20Segundo_%20_Art . %20174%20
a%20219_ . pdf (Santa Fe).
140. La Pampa, Salta, Tucuman, Mendoza, San Juan, Chaco,
Neuquen, San Luis, and Jujuy (text of provisions on file with the author).
141. Cordoba and Buenos Aires (text of provisions on file with the
author).
2019] Is Argentina Ready for the New International Tax Era? 945
between tax treaties and increased foreign investment is not proven.
142
Following the international agreed standards on information exchange
and transparency has definitely paid off for Argentina. It is impossible
to scientifically prove it, but we are certain that the result of the 2016
tax amnesty would have been quite different if the menace of automatic
information exchange was not imminent.
The implementation of new and thorough CFC Rules was a
reasonable measure taking into account the successful result of the
2017 tax amnesty. However, the practical consequences will be seen in
the near future. As to Argentina’s approach toward digital economy,
doing nothing as to direct taxes supports the trend of following OECD
recommendation. The attitude of the provinces serves as an advance
of what may occur with a, most likely, new federal government in 2020.
142. Eric Neumayer, Do Double Taxation Treaties Increase For-
eign Direct Investment to Developing Countries?, 43 J� dev� stUdIes 1501
(2007); Michael Lang & Jeffrey P. Owens, The Role of Tax Treaties in Facili-
tating Development and Protecting the Tax Base (WU Int’l Tax Research
Paper No. 2014- 03, 2014), http:// ssrn . com / abstract=2398438.
