Employees

Decree 1130/97

Taxes on Gains and Added Value. Amend article 9 (b) of Decree No. 2353/86 and article 5 of Decree No. 2407/86.

Bs. As., 30/10/97.

B. O.: 4/11/97.

VISTO Expedient No. 001-002964/97 of the registration of the MINISTERY OF ECONOMY AND ARTWS AND PUBLIC SERVICES, Article 9 (b) of Decree No. 2353 of 18 December 1,986 and its amendments, regulation of the Taxation Act (t.o. 1,997), and Item 21, of the Subparagraph (e),

CONSIDERING:

It is the purpose of the National Government to promote the expansion of markets in their different expressions.

That in order to achieve the proposed objective it becomes indispensable, given the particular characteristics and conditions of the markets that operate with derivative instruments and/or contracts, which are those whose economic content depends on the values of other underlying basic variables, the dictation of rules that allow to specify the appropriate tax treatment that must be dispensed to the results of the operations concluded through such instruments and/or contracts.

Such an initiative is framed by the need to remove the obstacle posed by the uncertainty in the fiscal treatment of the aforementioned operations, which will enable sustained growth in the markets that contribute to national development and full employment.

That operations with derivative instruments and/or contracts play a key role in economic development, which is to meet the coverage needs of the innumerable risks faced by market actors.

That in the context of economic and financial globalization and, in the pursuit of greater competitiveness and effectiveness, the interest shown by entities established abroad in increasing their participation in the aforementioned operations with counterparts of the country is promising.

That under the reasons set out in the above considerations, it is necessary to clarify in the statutory rules of tax on profits and added value, the applicable criteria for the imposition of transactions with derivative instruments and/or contracts.

That the General Directorate of Humanitarian Affairs of the MINISTERY OF ECONOMY AND ARTWS AND SERVICES PUBLICOS has taken the intervention that belongs to him.

That the present is given in the use of the powers conferred by article 99, paragraph 2, of the NATIONAL CONSTITUTION.

Therefore,

THE PRESIDENT OF THE ARGENTINA NATION

RIGHT:

Article 1- Replace article 9 (b), of Decree No. 2353 of 18 December 1,986 and its amendments, which regulates the Law on the Tax on Livestock (t. 1,997), with the following:

(b) the interests of bank deposits in the country; the interests of public securities, cédulas, bonds, letters of treasury or other securities issued by the Nation, the Provinces, the Municipalities or the GOVERNMENT of the CIUDAD AUTONOMA DE BUENOS AIRES; the dividends distributed by companies constituted in the country; the rent of things used in the country "

"Egal typification comes with respect to the results originated by rights and emerging obligations of derivative instruments and/or contracts, when the risk assumed is located in the territory of the ARGENTINA REPUBLIC, a location that should be considered configured if the party obtaining such results is a resident in the country or a stable establishment covered by article 69 (b) of the law. "

"However, when the different components of one of the above-mentioned instruments or a set of them that are linked, indicate that the instrument or set of instruments do not express the real economic intention of the parties, the determination of the location of the source shall be made in accordance with the principles applicable to the nature of the producer source; that it is appropriate to consider in accordance with the principle of economic reality, in which case the treatments provided for by law shall apply for the same results originated."

"Also, when a set of transactions with derivative instruments and/or contracts is equivalent to another transaction or financial operation with a treatment established in the tax law, such a set shall be applied to the rules of transactions or operations of which it is equivalent."

"Notwithstanding the provisions of the second paragraph of this paragraph, except for the coverage operations, the losses generated by the rights to which it refers, may only be compensated with net gains originated by this type of rights in the fiscal year in which the losses or in the CINCO (5) immediate fiscal years were experienced. "

"For the purposes of the preceding paragraph, a transaction or contract of derivative products shall be considered as "covering operation" if it is intended to reduce the effect of future fluctuations in prices or market rates, on the results of the or major economic activities. "

Art. 2°- The following is article 5 of Decree No. 2407 of 23 December 1,986 and its amendments, which govern the Law on Taxation of the Added Value (T. 1,997) and its amendment:

"ARTICLE... Benefits arising from derivative instruments and/or contracts, including the conclusion of the instrument, subsequent negotiation and compensation or liquidation as a result of its resolution or pursuant to its stipulations, without transfer of the underlying assets or services, do not constitute benefits under article 3 of the Act."

"On the other hand, if, as a result of the resolution of the instrument or following the fulfilment of its stipulations, there are impossible facts in accordance with article 1 of the Act, these shall be subject to the treatments provided by the instrument and by these regulations applicable to them."

"Notwithstanding what is stated in the first paragraph, when a set of derivative instruments linked to one another, or a component cement or several of them of the same instrument, denote that according to the principle of economic reality, the parties have made a transaction or tax payment by the tax, the rules provided for in the law and in this regulation shall apply for such transactions."

"Also, when a set of transactions with derivative instruments and/or contracts is equivalent to another transaction or financial operation with a treatment established in the tax law, such a set shall be applied to the rules of transactions or operations of which it is equivalent."

Art. 3°- Contact, post, give to the National Directorate of the Official Register and archvese.- MENEM.- Jorge A. Rodríguez.- Roque B. Fernández.