Brazilian Companies Push for Review of Brazil-Argentina Tax Treaty

Brazilian Companies Push for Review of Brazil-Argentina Tax Treaty

Originally published in the April 10 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)

Brazilian companies doing business in Argentina are pushing Brazil’s executive branch to review and amend the country’s income tax treaty with Argentina exempt Brazilian employees from the Argentine tax on personal property (impuesto sobre bienes patrimoniales, also known as the wealth tax, or impuestoa la riqueza). (For an English translation of the Brazil-Argentina treaty, see 95 TNI 187-23 or Doc 95-30507.)

The tax was created in 1991 by Argentina’s former economy minister, Domingo Cavallo, and it applies on Argentine and foreign assets of Argentine resident individuals and Argentine assets of nonresident individuals. The tax is withheld at a rate of 0.5 percent for personal assets totaling up to ARS 102,300 and at 0.75 percent for personal assets exceeding that value. Brazilian managers of Argentine companies are directly affected by the tax, which is borne by their Brazilian employers.

Brazilian companies say the tax is unfair to Brazilians because Argentina has exempted other countries from it. However, because the Brazil-Argentina tax treaty was signed before the creation of the personal property tax, the treaty does not provide for any related tax relief.

David Roberto R. Soares da Silva