Latin America in Focus — February 2016

Argentina

Foreign exchange control restrictions eased

On 16 December 2015, the new Argentine government eased the stringent foreign exchange controls that have been in place for the past several years and that restricted the inflow and outflow of foreign currency and were accompanied by formal authorization requirements. The policy changes, which are implemented through new central bank regulations, apply immediately.

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Brazil

Amnesty law for unreported assets

On 14 January 2016, the Brazilian government published Law 13,254/16 that establishes a repatriation disclosure amnesty regime, called the “Special Regime for Tax and Exchange Regularization” (or RERCT) that provides an incentive for Brazilian tax residents to voluntarily disclose undeclared assets maintained abroad. The new legislation is an effort by the government to increase tax collection in Brazil in light of the current economic downturn.

Software taxation amended

The São Paulo state authorities enacted Decree 61,791/2016 on 12 January 2016, introducing new rules relating to the taxation of software by ICMS (State VAT levied on goods and services) as from January 1st, 2016.

ICMS tax base on software reduced

On 29 December 2015, Brazil’s National Finance Policy Council (CONFAZ) enacted a “convention” (No. 181/15) authorizing 19 states (including Rio de Janeiro, Sao Paulo and Santa Catarina) to grant a reduction in the calculation tax base for state VAT (ICMS) purposes for transactions involving off-the-shelf software, computer programs, electronic games and applications, regardless of whether they are subject to customization and regardless of the type of support (e.g. physical, digital or otherwise) provided.

Netherlands holding company regime re-included on grey list

The Brazilian government issued guidance (Executive Declaratory Act 3/2015) on 18 December 2015 that revokes 2010 guidance that removed the Netherlands from Brazil’s “grey list” because the Dutch government was not able to provide evidence of the existence of domestic tax legislation that could justify the non-inclusion of the Netherlands as a privileged tax regime.

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Chile

New law modifies 2014 structural tax reform

The new law includes amendments that aim to simplify the income tax system, clarify certain rules, and provide certain incentives.

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Colombia

Expert commission submits final report on structural tax reform

The final report of the Commission for Tax Equality and Competitiveness includes a recommendation for the introduction of a new tax on business profits.

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Costa Rica

Congress approves tax treaty with Germany

On 12 January 2016, Costa Rica’s Congress approved the tax treaty signed with Germany on 13 February 2014; the ratification still must be published in the official gazette. The treaty with Germany will be Costa Rica’s second tax treaty to enter into force (Costa Rica currently has a treaty with Spain).

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Mexico

2016 tax reform enacted

On 29 October 2015, the Mexican Congress approved the reforms to existing laws, effective on 1 January 2016. This summary is not intended to cover all of the amendments made to the different articles or provisions. Therefore, its purpose is to outline those general provisions we consider most relevant.

Tax treaty with Argentina

Mexico and Argentina signed a new tax treaty on 4 November 2015. When in effect, the treaty provides for a 10% rate where dividends are paid to a company that holds at least 25% of the capital of the payer company; otherwise, the rate will be 15%.

Extension granted to nonresidents operating under maquiladora shelter regime

New tax rules allow nonresidents that fulfill certain requirements to opt for an additional four-year period to operate in the country under the maquiladora shelter regime without creating a permanent establishment.

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