On December 27, 2016, was published on the Official Gazette the Law 27346 (“Income Tax Reform”).

The most relevant points of the new Law are:

1. Currency futures. It sets a tax of 15% on the profits obtained from currency future transactions (if positive), provided that they were not related with a foreign trade or financial transaction set in foreign currency. No deductions will be allowed. This tax is only applicable for profits (i) obtained in 2016 for individuals or (ii) accrued in the fiscal year running on December 28, 2016, for corporate taxpayers.

This tax is not deductible and does not generate a tax credit for Income Tax purposes.

2. Value Added Tax (“VAT”): taxpayers contracting services rendered by foreign residents must act as substitute taxpayers for VAT purposes. Currently in Argentina there are many activities that in theory are subject to  VAT , but cannot be taxed because the taxpayer is out of the authorities’ reach. This reform will force the Argentine party to withhold such tax on behalf of its foreign counter-party. The local part will be entitled to a tax credit amount as the tax withheld.

4) Gaming companies: In accordance to the new law gambling games are subject to the following taxes:

1. Specific Tax on Gambling: 0.75% of the amount of each gamble.
2. Indirect Tax on Online Gambling: 2% on the gross value of each gamble.
3. The profits originated by gambling games at casinos, online gambling or slot machines are subject to Income Tax at a tax rate of 41,50%.
4.  
   4. Benefits for individuals:
   1. Increases personal deductions for individual taxpayers and their dependents, and sets the following special deductions:

   -Increases on 22% the personal deductions for taxpayers in a labor relationship or retired people, provided they live in the Patagonia region.

    

   -Sets a 40% deduction on residential rentals, up to $51,967 per year, provided the taxpayer is not the owner of any real estate property.

   The Income Tax Reform sets a mechanism in order to update  personal deductions in a yearly basis, starting  2018.

   1. Exempts from Income Tax the difference between the monetary value of overtime work and the value of ordinary hours earned by employees for the services provided during holidays and weekends.
   2. Updates the tax scales due to inflation. The Income Tax Reform sets a mechanism to update the scales in a yearly basis. In order to determine the tax rate, extra hours are excluded.

   The new Law did not include:

   1. The reestablishment of the import duties on the mining sector.
   2. Non-performing real estate tax.
   3. Dividend distribution tax.