May 31, 2023

East Valley Times

Complete News World

The government is speeding up the timing and will introduce the Money Laundering Bill in December

The rush to pump new dollars into the thirsty Argentine economy won’t stop with concessions to some sectors of a different exchange rate. The government is gearing up for the end of the year with strong tax news after Economy Minister Sergio Massa signed an information agreement with US Ambassador Mark Stanley.

As confirmed by two official sources, the administrative authority accelerated the timing A bill could be introduced in Congress to move forward on money laundering As a kind of supplement to the bilateral agreement which will come into force from the first day of next year.

“The Money Laundering Bill will be introduced in Congress this year. We don’t know if it will be approved in December, but we want the entire process to be completed by January 1, 2023, when the agreement with the US will come into effect,” a senior official said. From another event of the government, they confirmed that the initiative, which was given shape at the Palace of Finance, will gain parliamentary status for the rest of the year.

In the immediate future, tax news will take center stage at AFIP this week. Official sources have confirmed to LA NACION that the general resolution regulating the contract signed by Massa will be published in these hours.

After suspense, suspicions of tax experts and special tax lawyers, the government will finally begin to reveal part of the automatic funds transfer agreement signed with the United States, what information will be provided, what will be, the “practical consequences” of the agreement they sealed, confidence in the government.

According to a reference he reached NationAnd that As part of the resolution released by AFIP in the next few hours, The agreement was signed A mutation is IGA1. “Of the possible agreements that could be concluded, it is very detailed in that there are commitments and obligations on both sides,” says the document, which details the background and situation prior to the Fatka agreement signed by the economy minister last Monday. , Sergio Massa.

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“Coherence is expected in the application of FATCA to related jurisdictions and the commitment of the United States to achieve an equitable exchange of information with Argentina as with other countries,” it added.

The memorandum clarifies For the United States, the Treasury Department, and Argentina, AFIP is the competent authority. “If all notices and protocols are complied with, This agreement shall come into force from January 1, 2023,” In an interview with Alejandro Fantino, Guillermo concludes by pointing out, as assessed by Michael last week.

“The treaty includes all 50 North American states, including Delaware and South Dakota. The United States only excludes from its territorial definition: American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the United States Virgin Islands.” Refers to the memorandum on the geographical scope of the agreement.

Point G of the AFIP Release Memorandum states “Each party undertakes to obtain the information indicated with respect to all reportable accounts and shall automatically exchange them annually.” Then, specifically with the exchange, it explains that it collects certain information on “reportable accounts for Argentina at US financial institutions.” What kind of information? Account holder identification, financial institution identification, total amount of interest, dividends and other income from US sources received by Argentine residents in US accountsSets up the document.

Point four addresses the implications of signing Model 1 for Argentine financial institutions. There are three: the 30% withholding penalty no longer applies; Now they will be under the supervision of AFIP, which must control the proper fulfillment of duties; and not submit compliance (audit) certificates to the IRS.

In the change, the confidential document explains, they will be required to report directly to the IRS in 2023 (March) as they did in fiscal year 2022 and to report directly to AFIP at the indicated platform in the following years. That “It was communicated to Argentine banks on December 6, 2022.”

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A document to be released by AFIP in the next few hours specifically addresses four implications for Argentine taxpayers. That means:

1) Reciprocity: The United States will send information about subjects residing in Argentina.

2) The United States has committed to all countries that have entered into the Model 1 IGA Agreement (a mutual commitment to continuously improve the effectiveness of information exchange and transparency.

3) The U.S. remits where U.S. income (called Chapter 3 income) earned by a resident of a treaty country comes from. Basically, it will report “A financial account opened at a US financial institution is subject to reporting when:

a) in the case of a deposit account, the account holder is a person resident in Argentina and the account pays more than $10 in interest in any calendar year; One

b) With respect to a financial account other than a deposit account, where the account holder is a resident of Argentina, including entities certifying that they have financial residence in Argentina, the income paid or credited, with a source in the United States under Chapter 3 of Subtitle A of the United States Internal Revenue Code or Chapter 61 of F States under reporting.

4) Most suitable may be Custodial Accounts (For example, there are investments in the US stock market, even through corporate or trust structures).

1) Generally, a non-US resident (in this case, Argentina) pays taxes on two types of income in that country: one FDAP rent It is known as fixed, determinable, annual, periodic (FDAP) and includes interest, dividend, rent, royalty etc. Essentially, passive income is included; By divesting interests in local properties and partnerships; And one ECI rent Effectively linked to the conduct of a business in the United States (ECI).

For non-residents to pay these taxes, The United States generally applies a responsible retention and information regime for North American material on payment. The AFIP document asks that the US withholding agent know how to withhold and how much. Answer it there He estimated and explained that “the non-US subject (in this case, Argentina) needs to be identified through the W8 form” and that “there are five types of W8 forms (ie: BEN, BEN-E, IMY, ECI, EXP)”.

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“An Argentine entity that receives FDA income (for example, has an account Broker in the United States and receives dividends from Apple stock) identified on the W8-BEN form. There he identifies himself as the owner of the account (account holder) and a subject resident in Argentina. An example is given.

“The US withholding agent (the financial institution that pays the dividend and all entities that intervene until the dividend is paid to the beneficiaries), must report the income received to the IRS in March of each year. Subject to Argentina and tax withheld”, The report clarified and concluded: “This is done through an electronic form called 1042-S. It was identified there that Argentina received dividend income per capita and taxes on such amounts were withheld.

“Similarly, the withholding agent must submit a 1042 tax return each year detailing the gross income paid and the amount made. That report must be consistent with all 1042-S reports. They concluded: “The account holder can be a corporation (offshore company or trust). In these cases, identification is usually done through a W8-BEN-E or W8-IMY form (if you act as an intermediary in this case). On those forms, the entity must be specifically classified for Chapter 3 purposes.

“For entities classified as non-US partnerships, certain types of non-US trusts and non-US express corporations must also trace the domicile of the beneficial owners”, clarified one of the most controversial points. “This allows the withholding agent to apply the correct withholding at source (a beneficiary with a 30% interest in Argentina who maintains a minor, rather than a resident of a country such as the Netherlands. By a CDI application”), it concluded: “The income of the end beneficiary shall be reported by the withholding agent.”

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