Reduced Tax on Foreign Currency Acquisition – Introduction
On 2 September 2024, the Argentine government published Decree No. 777/2024 in the Official Gazette.
This Decree introduces a significant reduction in the tax on the acquisition of foreign currency, cutting the rate from 17.5% to 7.5% for specific transactions related to import and export activities.
The changes are expected to benefit businesses involved in international trade by lowering the cost of foreign currency purchases for freight and transport services, as well as certain imports.
Key Changes in Foreign Currency Taxation
The Decree specifically reduces the foreign currency acquisition tax for the following transactions:
Freight and Transport Services for Import/Export
The tax rate is reduced from 17.5% to 7.5% on foreign currency acquired for payments related to freight and other transport services tied to import and export operations.
This change applies to both local and foreign-provided services.
Imports of Goods
A similar reduction, from 17.5% to 7.5%, applies to foreign currency acquired for the importation of goods, with some exceptions.
Notably, certain types of oil and raw materials used in food production, as well as goods related to energy generation, remain taxed at the higher rate.
These changes are effective for transactions involving the acquisition of foreign currency starting on September 2, 2024.
Background on the Foreign Currency Tax
The foreign currency acquisition tax was first introduced by Law No. 27,541 of Social Solidarity and Productive Reactivation, enacted in December 2019 in response to Argentina’s economic challenges.
The law applied to Argentine residents for various types of foreign currency purchases, including savings, travel expenses, and payments for foreign goods and services.
Implementation and Compliance
Entities designated as collection agents under the Emergency Law, including financial institutions, will be responsible for ensuring compliance with the Decree. They will collect the tax on foreign currency acquisitions according to the new rates for applicable transactions.
Reduced Tax on Foreign Currency Acquisition – Conclusion
The reduction of the foreign currency acquisition tax from 17.5% to 7.5% on specific import and export-related activities is a positive development for businesses engaged in international trade.
By lowering the cost of acquiring foreign currency for freight services and certain imports, the Decree aims to improve the economic conditions for these sectors.
Argentine businesses should carefully review the changes and ensure that their transactions align with the new tax rules starting from 2 September 2024.
Final thoughts
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