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Samstag, 31. Oktober 2015

Switzerland approves Argentine tax deal

Friday, October 30, 2015

Switzerland approves Argentine tax deal

AFIP tax bureau head Ricardo Echegaray (left) meets with Swiss National Council head Stéphane Rossini (centre) and Swiss Ambassador in Buenos Aires Hanspeter Mock yesterday.
By Fermín Koop
Herald Staff
Agreement that comes into effect next year will make it easier for AFIP to locate evaders

Starting next year, Argentina will be able to demand fiscal and financial information about its citizens from Switzerland as part of a a wider agreement signed between both countries to prevent double taxation. 
Switzerland finished ratifying the agreement yesterday, which had already been approved by the Argentine Congress. The new text puts an end to the agreement vacuum between both countries and gives the AFIP tax bureau a key tool to tackle tax evasion. Argentines are estimated to hold some US$400 million in tax heavens.
The agreement exempts Swiss and Argentine companies from paying several key taxes, including income tax and personal property tax in the two countries at the same time. 
Argentina is the second most important investment destination in Latin America for Swiss companies at some 5.7 billion euros per year. 
“It’s the first time Argentina can sign an agreement like this. We worked a lot for it to be approved in Congress quickly since it allows us to strengthen the commercial relationships between the two countries,” AFIP head Ricardo Echegaray said yesterday, in a meeting with the Swiss ambassador in Argentina, Hanspeter Mock. 
Benefits aside, what matters most to the AFIP tax bureau is the fiscal information that will be shared between both countries. The exchange won’t be automatic and information can only be requested once an investigation has been launched by the judiciary. 
This doesn’t mean, however, that the automatic information exchange couldn’t be achieved in the future. 
The government hopes to move forward with that as soon as possible, setting 2017 as the objective. Nevertheless, other countries are thinking more on the long-term. Switzerland said it could start sharing data automatically by 2018 but only if there is a methodology that is accepted globally. 
“The company or the individual and the bank where the account is held has to be identified by AFIP in order to file the request,” César Litvin, tax expert and head of the Argentine Tax Institute, told the Herald. “Argentina agreed to start sharing fiscal data with countries automatically since September 2017. Still, Switzerland won’t do it until 2018 and depending on other competitor countries doing the same.”

Not retroactive
The deal won’t be retroactive so it shouldn’t have any effect on the HSBC tax evasion scandal that is currently being discussed in Congress. But it will help to get information from current account holders. 
Argentina charged HSBC last year with aiding more than 4,000 Argentine clients to evade taxes by stashing their money in secret Swiss bank accounts.
Tax experts anticipate that there will be a large number of information requests filed by AFIP starting in January. But if these requests do not have enough legal backing, Switzerland can reject it. That happened many times with Uruguay, a country with which AFIP signed a similar agreement.
“AFIP will file many requests starting next year,” Marcos Torassa, accountant and partner at Torassa & O’Donnell, told the Herald. “Switzerland can of course reject all the requests if it sees that AFIP doesn’t have sufficient proof.”

An old agreement
The new agreement with Switzerland replaces an older one signed between both governments in 1997 that was cancelled by Argentina in 2012. Among the reasons behind the cancellation, was that President Cristina Fernández de Kirchner’s administration wanted to include an information exchange clause in the new agreement while AFIP had reported a loss in tax collection due to the characteristics of the old agreement, according to tax experts.
In the last few years, AFIP has sealed numerous double taxation agreements, signing the last one with Spain in 2014, as well as having subscribed to an agreement with the Organization for Economic Co-operation and Development (OECD), which allows it to be part of a 35-country network that can exchange relevant fiscal information.
Switzerland and Argentina pledged last year together with 45 OECD countries to share financial information automatically on an annual basis with other governments, including taxpayers’ bank balances, dividends, interest income and sales proceeds used to calculate capital gains tax.
Although signatories did not officially commit to a specific deadline, a group of early adopters is aiming to have exchange of information up and running by 2017, using tax data collected from the end of 2015. Banks will have a year to adapt their information technology systems while governments will have to modify their tax laws.

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