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LATAM_tax_guide_2019_cover.pdf 1 26/07/2019 15:18:59 Latin America tax guide 2019-20 C M Y CM MY CY CMY K FOREWORD The Latin America Tax Guide 2019/20 provides an overview of the taxation and business regulation regime of Latin America’s most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current on 30 June 2019, while also noting imminent changes where necessary. On a country-by-country basis, each summary addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country's personal tax regime. The final section of each country summary sets out the double tax treaty and non-treaty withholding tax rates relating to the payment of dividends, interest, royalties and other related payments. While the Latin America Tax Guide should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. Services provided by member firms include: • Assurance & Advisory; • Tax Advisory & Compliance; • Financial Planning / Wealth Management; • Corporate Finance; • Management Consultancy; • IT Consultancy; • Insolvency - Corporate and Personal; • Forensic Accounting; and, • Hotel Consultancy. i PKF LATAM Tax Guide 2019/20 IMPORTANT DISCLAIMER All information contained herein is believed to be correct at the time of publication, 30 June 2019. The contents should not be used as a basis for action without further professional advice. While utmost care has been taken in the compilation of this publication, no responsibility will be accepted for any inaccuracies, errors or omissions. This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International Limited (PKFI) administers a family of legally independent firms. Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms. PKF INTERNATIONAL LIMITED JUNE 2019 © PKF INTERNATIONAL LIMITED All RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION ii PKF LATAM Tax Guide 2019/20 CONTENTS FOREWORD ��i IMPORTANT DISCLAIMER ��ii CONTENTS ��iii STRUCTURE OF COUNTRY DESCRIPTIONS ��iv ARGENTINA ��1 BOLIVIA...........................................................................................................................................................11 BRAZIL ��15 CHILE ��24 COLOMBIA......................................................................................................................................................35 COSTA RICA ��40 DOMINICAN REPUBLIC ��45 ECUADOR ��49 EL SALVADOR ��56 GUATEMALA ��60 HONDURAS ��64 MEXICO ��69 NICARAGUA ��78 PANAMA ��83 PARAGUAY.....................................................................................................................................................90 PERU...............................................................................................................................................................96 URUGUAY ��104 VENEZUELA ��109 iii PKF LATAM Tax Guide 2019/20 STRUCTURE OF COUNTRY DESCRIPTIONS A� TAXES PAYABLE FEDERAL TAXES AND LEVIES COMPANY TAX CAPITAL GAINS TAX BRANCH PROFITS TAX SALES TAX / VALUE ADDED TAX (VAT) FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES B� DETERMINATION OF TAXABLE INCOME CAPITAL ALLOWANCES DEPRECIATION STOCK / INVENTORY CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS LOSSES FOREIGN SOURCE INCOME INCENTIVES C� FOREIGN TAX RELIEF D� CORPORATE GROUPS E� RELATED PARTY TRANSACTIONS F� WITHHOLDING TAX G� EXCHANGE CONTROL H� PERSONAL TAX I� TREATY AND NON-TREATY WITHHOLDING TAX RATES iv PKF LATAM Tax Guide 2019/20 Argentina ARGENTINA A MEMBER FIRM City Name Contact Information Buenos Aires Gustavo Director +5411 5235 6446 [email protected] BASIC FACTS Full name: Argentine Republic Capital: Buenos Aires Main languages: Spanish Population: 45.01 million (2019 estimate) Monetary unit: Argentine Peso (ARS) Internet domain: .ar Int. dialling code: +54 KEY TAX POINTS • Companies domiciled in Argentina are subject to income tax on their worldwide income. Non-resident companies are subject to tax on Argentina-sourced income. • There is no separate capital gains tax levied on capital gains of companies as they fall under the scope of corporate income tax. • VAT is applied at all stages of the production and selling processes (output tax). Tax suffered in the immediately preceding stage is deductible (input tax). • Any foreign taxes paid on foreign-accrued income may be credited against Argentine income tax up to the limit of the Argentine tax on the same income. • Transactions between Argentine companies and related parties are deemed to take place at arm's length rates for tax purposes. For income tax assessment purposes, Argentine Law provides for the traditional methods generally used for transfer pricing (comparable uncontrolled price, resale price, cost plus, profit split, transaction net margin) to demonstrate that an arm's length price has been used. • Argentine-sourced income paid to foreign recipients not having a permanent establishment in Argentina is subject to 35% withholding tax. However, for each activity, the law establishes a percentage of presumptive net income on which 35% withholding tax is applicable, thereby reducing the effective tax rate. • Income tax is levied on income earned by resident individuals in Argentina and abroad. • Personal assets tax (wealth tax) is levied on all assets, wherever situated, of Argentine domiciled persons, on Argentine assets of non-domiciled persons and on shares issued by an Argentine company (the company pays the tax on behalf of the shareholders). In the case of trusts (excluding financial trusts), the trustee pays the tax on behalf of the beneficiaries.

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