vol. 13, issue no.3, march 31, 2011 global tax briefing · adoption of the new withholding tax...

INSIDE

VOL. 13, ISSUE NO.3, MARCH 31, 2011

GLOBAL TAX BRIEFINGLatin America

LATIN AMERICA

This month’s issue of Global Tax Briefi ng

is written entirely by members of the

Latin American Tax and Legal Network

(LATAXNET). LATAXNET, headed up

by Miguel Valdés, of Valdés, Machado

& Associates, LLC., is a network of top

tax and legal specialists all over Latin

America, Puerto Rico, the Caribbean and

the United States. See back cover for

more information about LATAXNET

Colombia Kicks-Off New Year with Important Tax Reform 1 by Adrian F. Rodriguez 2 , Lewin & Wills Abogados, Bogota, Colombia

On December 29, 2010, the 2011 Tax Reform Act was enacted 3 , adopting material changes to the current Colombian tax framework. In addition to the national level income and VAT taxes, this act adopts many other important changes in the national net-worth and bank debits taxes, and in certain aspects of local (territorial) taxes, among other changes and measures to increase tax collections.

Th e topics of the 2011 Tax Reform Act herein featured are: (1) the im-mediate elimination of the 30% FAID special income tax deduction (2) the adoption of a 14% withholding tax on certain cross-border fi nancings; (3) the changes to the “ one-time ” net–worth tax assessable on January 1, 2011; (4) the unexpected adoption of the 25% surcharge on this 2011 net-worth tax and the adoption of this tax for taxpayers with gross net-worth between USD $500k and USD $1.5m, among other related measures adopted in the year-end “ Economic Emergency ” decrees; (5) the adoption of an advanced collection “ self-withholding tax ” on hydrocarbons and minerals exports of up to 10%; (6) the elimination of the zero-rated VAT regime for “ intermediate services in the production line ” for hydrocarbons and mining export activities; (7) the elimination of the special transfer pricing regime for mining activi-ties; (8) the reduction of penalties in transfer pricing compliance; (9) the amendments to the current statutory foreign tax credit regime for Colombian income tax taxpayers; (10) the changes introduced to the Bank Debits Tax and its progressive sunset scheduled for 2018; and (11) the temporary availability of penalties and lateness interest rebates in national level tax debts 4 .

Immediate Elimination of the 30% FAID Special Income Tax Deduction for all Taxpayers

Th e 2011 tax reform act adopts an immediate elimination of the “ popu-lar ” 30% Fixed Assets Investments Income Tax Deduction (“ FAID ”), beginning January 1, 2011.

1 Colombia

7 Argentina

9 Uruguay

10 Brazil

13 Chile

16 Bolivia

17 Costa Rica

17 Dominican Republic

18 Ecuador

20 Puerto Rico

22 Panama

©2011 CCH. All Rights Reserved.

2 GLOBAL TAX BRIEFING

CCH EDITORS

Managing Editor

Jerome Nestor

Editor

Kristina Kulle

Production

Shashila Kanan

Designer

Chris Tankiewicz

CCH, a Wolters Kluwer business, has been a leader in topical law reporting since 1913. Today, CCH offers more than 300 print, on-line, and CD-ROM tax and business products across the globe from its offi ces in the United States, Canada, Europe, Australia, New Zealand and Asia. CCH also offers an extensive tax research library on the internet, at www.CCHGroup.com.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in render-ing legal, accounting or other pro-fessional service. If legal advice or other expert assistance is required, the services of a competent profes-sional should be sought.

CCH welcomes articles submit-ted by outside authors for pos-sible publication. Manuscripts and inquiries may be directed to the Editor, Global Tax Briefi ng, International Taxation, CCH In-corporated, 2700 Lake Cook Road, Riverwoods, IL 60015.

Subject to eligibility, for FY2010 income taxpayers are entitled to deduct 30% of their investments in tangible fi xed assets used in their income producing activity. Although the percentage varied from 25% to 40%, this deduction was available since FY2003 for both purchased and manufactured ( or built ) assets, and for both new and used (second-hand ) assets. Leased assets were also eligible for this incentive, provided that the taxpayer exercises the irre-vocable purchase option in the corresponding agreement. Certain rules and restrictions were applicable 5 .

Although the change originally proposed by the Colombian Government was the immediate elimination for the hydrocarbons and mining industries and a progressive elimination for all other sectors, the Colombian Congress opted for the immediate elimination of the FAID for all sectors.

Interestingly, the Lawmaker in the 2011 tax reform act provided that any income tax taxpayers that included the 30% FAID in a Legal Stability Agree-ment (hereinafter “ LSA ”) fi led for before November 1, 2010, will be entitled to benefi t from the 30% FAID for up to three-years. Th e Lawmaker was silent with respect to those taxpayers with LSAs already executed (vis-à-vis those fi led for) that also included the 30% FAID; will they continue to benefi t from the 30% FAID for the term of the duration of the corresponding LSA or will this benefi t also be limited to a 3-year term? Th is should be carefully analyzed on a case-by-case basis, as it is likely to be a controversial issue.

As a reminder, since their adoption on 2005, LSAs have become important tools for eligible investors and companies in Colombia seeking to prevent future changes in selected features of the Colombian legal and tax framework, that they consider key to their investments and business activities in the country 6 .

14% Withholding Tax on Certain Cross-border Financing Facilities

Pursuant to the 2011 tax reform act and unless otherwise provided for in the applicable regulations, interest payments on certain inbound cross-border “ Qualifi ed Credit Facilities ” and “ Qualifi ed Leasing Transactions ” ( both as defi ned further below ), shall be subject to a 14% withholding tax. If the 14% withholding tax is not applied, the Colombian payor cannot deduct the cor-responding interest payment, without prejudice of its joint and several liability for the tax that was not withheld.

For over 25 years, the Colombian income tax regulations privileged interest payments on certain Qualifi ed Credit Facilities and Qualifi ed Leasing Trans-actions, by deeming such payments as income not from a Colombian source thus not subject to Colombian Withholding Tax. If the cross-border inbound fi nancing was not qualifi ed or otherwise exempted, the corresponding interest payments were subject to a 33% withholding tax.

3March 31, 2011

CCH Global Tax Briefing

Under the previous regime, the following cross-border inbound fi nancings were deemed “Quali-fi ed Credit Facilities” eligible for the withholding tax-free treatment:

(a) Short-term bank overdrafts and short-term import fi nancing ( without any changes in the 2011 tax reform act ).

(b) Exports fi nancing or pre-fi nancing ( without any changes in the 2011 tax reform act ).

(c) Financings contracted abroad by Colombian fi nancial institutions ( in the 2011 tax reform act, Congress adopted certain modifi cations to this item to include Bancoldex and other fi nancial type entities ).

(d) Financing for foreign trade operations contract-ed through Colombian fi nancial institutions ( in the 2011 tax reform act, Congress adopted certain modifi cations to this item to include Bancoldex and other fi nancial type entities ).

(e) Financing with foreign fi nancial institutions, which funds were destined to a “ Qualified Activity ,” i.e., activities that according to the directives of the Colombian Council for Social and Economic Development ( CONPES ), were deemed of public interest for Colombia’s social and economic development. Th ese included all activities related to the primary, manufacturing and services sector, including transportation, engineering, lodging, tourism, health, trade, and housing construction.

Under the new regime, item (e) above has been revoked and no longer qualifi es as a Qualifi ed Credit Facility eligible for the withholding tax-free treatment, and any cross-border inter-est payments on such facilities made pursuant to agreements entered on or after January 1, 2011, will be subject to a 14% withholding tax, provided that the facility’s term is equal or greater than 1-year. If the facility is not within items (a) through (d) and it’s term is less than 1-year, the applicable withholding tax rate on the interest payments should be 33%. For the avoidance of doubt, it is important to highlight that under the new regime, facilities within

items (a) through (d) above with a term equal or greater than 1-year, will continue to be deemed as Qualifi ed Credit Facilities eligible for the withholding tax-free treatment.

Any interest payments on inbound cross-border Qualifi ed Credit Facilities and Qualifi ed Leasing Transactions made pursuant to agreements entered on or before December 31, 2010, shall continue to be eligible for the withholding tax-free treatment. Th is provision will likely be a source of controversy with the Colombian Tax Service, because of the measures adopted by the Colombian Government back on No-vember 5, 2009 7 , in this regard, which may confl ict with the tax reform act’s transition rule.

Th e new regime makes clear that, provided that the off ering is made by a Colombian issuer and that the securities are traded outside of Colombia, notes of-ferings, bonds off erings, and off erings of similar debt securities, are not deemed held in Colombia. In our view, the importance of this provision is that despite the adoption of the new withholding tax regime on cross-border interest payments, cross-border interest pay-ments made pursuant to this type of off erings should not be deemed income from a Colombian source and should not be subject to Colombian withholding tax, when the benefi ciary is a non-resident. Nonetheless, please bear in mind that application of this rule should be carefully analyzed on a case-by-case basis.

Cross-border interest payments on inbound cross-border fi nancing where the borrowers/debtors are Colombian governmental entities shall continue to be eligible for withholding tax-free treatment.

2011 Net–worth Tax Revenue Increase Measures

Th e previous 2010 tax reform act introduced a “ one-time ” net-worth tax assessable on January 1, 2011 and payable in 8 semiannual installments through 2014 8 . Th is tax is almost identical to its predecessor 1.2% net-worth tax in force through fi scal year 2010. In adopting this new “one-time” tax, the defi nition therein of “ taxable base ” allowed to construe that upon exclusion from the taxable base of



certain non-taxable items, e.g., stock or quotas in Colom-bian companies, the taxpayer was not subject to this tax if the net taxable net-worth was below the taxable threshold of approximately USD $1.5m ( COP $3,000,000,000 ) 9 . Th e 2011 tax reform act recently enacted by Congress adopts measures to correct this “ imperfection ” clarifying that the tax is applicable on the taxpayers’ gross net-worth, i.e., before excluding non taxable items, even if after excluding the non-taxable items the resulting net taxable net-worth drops below the lower bracket.

In addition to this clarifi cation, the Colombian Congress adopted a series of measures to “ tackle ” tax avoidance strategies such as the creation of new SAS companies (simplifi ed stock corporations ) and statutory divisions of companies, popular amongst taxpayers as a net-worth partition strategy to avoid triggering the net-worth tax. Pursuant to the newly adopted measures, the net-worth of the target entity ( whether resulting from the creation of a new SAS or a statutory division ) shall be added to the net-worth of the “ contributing ” or “ divided ” taxpayer, in order to determine whether the Net-worth Tax is triggered.

As a reminder, taxpayers subject to the newly adopted net-worth tax would have to assess the tax on their net-worth as of January 1, 2011. If the taxpayer’s net-worth as of January 1, 2011 was approximately USD $1.5m ( COP $3,000,000,000 ) without exceeding ap-proximately USD $2.5m ( COP $5,000,000,000 ), the applicable rate would be 2.4%. If the taxpayer’s net-worth exceeds USD $2.5m ( COP $5,000,000,000 ), the applicable rate would be 4.8%.

For purposes of this tax, it is important to keep in mind the change adopted by the previous 2010 tax reform act regarding related party debt deemed as equity. Pursuant to the amendment enacted therein, all related party debt would be deemed as equity 10 for tax purposes 11 .

Year-end “Economic Emergency” Measures Increasing the Reach of the 2011 Net-worth Tax

Motivated on the damages suff ered by the victims of the rain-fl oods catastrophe, the Colombian Government declared the State of Emergency and through “ Economic

Emergency ” Decree No. 4825, issued on December 29, 2010, adopted two new brackets of taxpayers subject to the “ one-time ” 2011 net-worth tax commented on §3 above. According to these measures, if the taxpayer’s gross net-worth as of January 1, 2011, was approximately USD $500k ( COP $1,000,000,000 ) without exceeding approximately USD $1m ( COP $2,000,000,000 ), the applicable rate is 1%. If the taxpayer’s gross net-worth was between USD $1m ( COP $2,000,000,000 ) and USD $1.5m ( COP $3,000,000,000 ), the applicable rate is 1.4%. Taxpayers subject to the newly adopted net-worth tax would have to assess the tax on their net taxable net-worth as of January 1, 2011, and the tax is payable in 8 semiannual installments through 2014. If the taxpayer’s gross net-worth did not exceed USD $500k ( COP $1,000,000,000 ), the taxpayer is not subject to the 2011 net-worth tax 12 .

Additionally, through the year-end “ Economic Emer-gency ” measures the Government adopted a 25% surcharge on the “ one-time ” 2011 net-worth tax for taxpayers with a gross net-worth greater than USD $1.5m ( COP $3,000,000,000 ). Like the reference tax, the surcharge should be assessed on January 1, 2011, and is payable in 8 semiannual installments through 2014. Th e adoption of this surcharge results in an eff ec-tive economic burden (including both the reference tax and the surcharge) of 3% of their net taxable net-worth for taxpayers with a gross net-worth between USD $1.5m ( COP $3,000,000,000 ) and USD $2.5m ( COP $5,000,000,000 ), and of 6% of their net taxable net-worth for taxpayers with a gross net-worth greater than USD $2.5m ( COP $5,000,000,000 ). For the avoidance of doubt, net-worth tax taxpayers in the gross net-worth brackets between USD $500k ( COP $1,000,000,000 ) and USD $1.5m ( COP $3,000,000,000 ) are not subject to the 25% net-worth tax surcharge aff ecting net-worth tax taxpayers in the gross net-worth brackets greater than USD $1.5m ( COP $3,000,000,000 ).

Th rough the year-end “ Economic Emergency ” measures the Government adopted additional complex regula-tions aff ecting all taxpayers of the 2011 net-worth tax, regardless of the bracket they are in, which are not com-mented herein and that require careful examination on a

5March 31, 2011


case-by-case basis. Among these, are worth noting both (i) the adoption of a measure for purposes of determin-ing whether the net-worth tax is triggering, “ disregard-ing ” any net-worth partition strategies implemented by the taxpayer, and (ii) the carve out from LSAs entered pursuant to the Legal Stability Agreements Act No. 963-2005 of both the 2011 net-worth tax for taxpayers in the brackets below USD $1.5m ( COP$3,000,000,000 ) and the surcharge for taxpayers in the brackets above USD $1.5m ( COP $3,000,000,000 ).

Th rough a recent revenue ruling the Colombian Tax Service adopted the “ likely controversial and debatable ” po-sition that taxpayers subject to the 2011 net-worth tax in the brackets above USD $1.5m ( COP $3,000,000,000 ), cannot benefi t from a previous LSA they have entered on that covered previous predecessor net-worth taxes 13 .

Advanced Collection Self-Withholding Tax on Hydrocarbons and Minerals Exports

Pursuant to the recently enacted 2011 tax reform act, hydrocarbons and mineral Colombian exporters shall assess, and pay within the next month, a “ self-withholding ” on the gross sales price of their exports. Such withheld amounts are creditable towards the corresponding fi scal year income tax liability of the Colombian exporter, which is assessable and payable on the immediately following year. Th e tax reform act invests the Colombian Government with the power to determine the withholding tax rate applicable on these exports, which cannot be greater than 10%.

Rather than a real withholding tax burden on the foreign purchaser, this “ self-withholding ” burden on the exporter constitutes an advanced collection mechanism of its Colombian income tax liability for the corresponding fi scal year.

Elimination of the Zero-rated VAT Regime for “ Intermediate Services in the Production Line ” for Hydrocarbons and Mining Export Activities

Because hydrocarbons and mining exports were zero-rated for VAT purposes, prior to this reform certain

“ intermediate services in the production line ” were also eligible for zero-rated treatment. Th is will no longer be the case beginning January 1, 2011.

Provided compliance with statutory requirements, certain “ intermediate services in the production line ” are eligible for preferential VAT treatment, i.e., taxed at the same VAT rate to which the fi nal product is subject. As of January 1, 2011, this preferential treatment is no longer available for taxpayers in the hydrocarbons and mining industries. Th us, such ser-vices in such industries will be subject to the general VAT regime and rate 14 . For the avoidance of doubt the above mentioned preferential VAT treatment continues to be available for other industries.

Elimination of the Special Transfer Pricing Regime for Mining Activities

Th rough this tax reform act and beginning FY2011, the Colombian Congress eliminates the special fi x-price transfer pricing regime currently in place for mining activities and adopted back in 2006 15 . As a result of this change, as of January 1, 2011, mining activities shall be subject to the ordinary transfer pric-ing “ arm’s-length based ” regime.

For Income tax purposes Colombia has a regular trans-fer pricing “ arm’s-length based ” regime, which mostly resembles international OECD guidelines ( hereinafter the “Regular Regime ”). When it comes to mining activi-ties in the country, since 2006, certain Eligible Income Tax Payers (hereinafter “EIT” ) were subject to a special transfer pricing “ fi x-price based ” regime ( hereinafter the “Special Regime” ). Under the Special Regime, semiannu-ally the Ministry of Mines and Energy fi xed the deemed price for each exporter for that 6-month period, and that price multiplied by the number of exported tons was the deemed income tax base for mineral exporters.

Both the Regular and Special Regimes are applicable with respect to cross-border transactions between related parties. Th e Colombian catalog of foreign related party situations is complex and the income taxpayer must review it carefully.



EITs subject to the Special Regime were minerals pro-ducers/exporters that in the immediately preceding fi scal year had export sales over USD$ 100m.

Reduction of Penalties in Transfer Pricing Compliance

Income tax payers subject to the Regular Regime have to comply with certain documentation and transfer pricing returns fi ling obligations. Non-compliance of such obligations gives rise to penalties. Th ese transfer pricing compliance penalties are being reduced in more than 40% by the 2011 tax reform act.

Amendments to the Current Statutory Foreign Tax Credit (“ FTC ”)

Th e current Colombian income tax regime provides for an FTC, provided compliance of certain statu-tory requirements and subject to certain limitations. Pursuant to these regulations Colombian companies with operations outside of Colombia are eligible for both a direct and an indirect statutory FTC for taxes levied by the source country on non-Colombian source income and dividends respectively.

Th e 2011 income tax reform act adopts a series of changes to the relevant regulations, including among others, (a) an additional remote FTC on taxes levied by a Th ird Country, for Colombian companies receiving distributions from foreign companies that have received a distribution subject to income tax in said Th ird Country, and (b) the introduction of a 15% minimum interest requirement to be entitled to the FTC.

Th e new regulations of the FTC are complex and should be carefully examined on a case-by-case basis.

Bank Debits Tax Revenue Increase Measures, Sunset Scheduled for 2018, and Increase of the Corresponding Income Tax Deduction

Th e 2011 tax reform act adopts a series of changes and measures to “ tackle ” certain alternatives off ered by fi nancial institutions and other authorized agents,

as planning tools to minimize the economic burden of this tax.

Th is national level tax has been in place since the year 2000 and currently taxes, among others, all funds withdrawn or transferred from checking or savings ac-counts in Colombia at a tax rate of 4 per thousand.

In addition to the abovementioned revenue increase measures, the Colombian Congress has approved the sunset of this tax through a phase-out tax rate scale that begins on 2014 with a reduction to 2 per thousand, followed by a further reduction in 2016 to 1 per thousand, and its fi nal elimination beginning 2018.

In addition and subject to certain requirements, as of FY2013, the 2011 tax reform act authorizes an income tax deduction of 50% of the Bank Debits Tax paid by the income taxpayer during the corresponding fi scal year. Th e current authorized deduction in place through FY2012 is of 25%.

Temporary Availability of Penalties and Lateness Interest Rebates for National Level Tax Debts

National level taxes taxpayers that agree to pay their outstanding tax debts corresponding to 2008 and prior taxable periods, are eligible to benefi t from a 50% rebate of any outstanding penalties and late-ness interest, authorized by the 2011 tax reform act, provided that the owed amounts are paid within the 6 months following the enactment of the 2011 tax reform act, i.e., December 29, 2010, and that the taxpayer continues to timely fi le and pay her taxes during the 2 years that follow the date in which the owed amounts were paid. If the taxpayer fails to comply with the latter condition, the benefi t will be recaptured in full and the Colombian Tax Service is allowed to seek payment of the rebated amounts. Certain rules and restrictions apply.

Th e 2011 tax reform act authorizes local authorities to adopt measures granting a similar rebate for local ( territorial ) level tax debts.

7March 31, 2011


Other Important Changes Introduced

As mentioned in the introductory paragraphs of this issue, the 2011 tax reform act adopts other material changes not discussed herein that should be carefully studied, seeking qualifi ed advice from professional tax attorneys admitted to practice law in Colombia. Some ( not all ) of these measures are: changes in the VAT withholding regime for providers of Foreign Trading Companies; changes in the terms and pro-ceedings for VAT refunds; the progressive elimination of deductible expenses paid in cash; the extension of the early expiration term to audit income tax returns subject to the compliance of certain requirements; the VAT rate reduction for certain sports and recreation vessels from 35% to 20%; and the 3-year extension of the contributions for public works contracts, public works concessions and other concessions; among others. 16 ◆

1 Please bear in mind that this document presents a selective sum-

mary of this tax reform for informational purposes only and it is not

intended to be a detailed and comprehensive dissertation of all the

topics found therein. Therefore, it is advisable that the readers do

not exclusively rely on this document and thoroughly review the

measures and changes that could affect them, seeking qualifi ed

advice from professional tax attorneys admitted to practice law

in Colombia. This article was originally dated January 11, 2011.

2 The author is a partner with the law fi rm of Lewin & Wills Colom-

bia. He is admitted to practice in Illinois, New York and Colombia

and holds an LLM in International Taxation from NYU. He can be

reached at [email protected]

3 Tax Reform Act No. 1430 – 2010.

4 In matters of taxation the Colombian Congress had a prolifi c

year-end and in addition to the 2011 Tax Reform Act, many other

changes were introduced in other pieces of legislation enacted

last December, which are not featured herein.

5 For more information on the creation and evolution of the FAID,

see: C olombian_ T ax_ F lash®: July 2004, yr. 1 – No. 2; November

2006, yr. 3 – No. 7, P.1 [unnumbered item 2]; January 2007, yr.

4 – No. 8, P.2 [unnumbered item 5]; April 2007, yr. 4 – No. 10,

P.2 [unnumbered item 6]; October 2007, yr. 4 – No. 12, P.1 [un-

numbered item 2]; August 2008, yr. 5 – No. 15, P.2 [unnumbered

item 3]; September 2009, yr. 6 – No. 17, P.1, §§2(b) and 2(c); March

2010, yr. 7 – No. 18, P.2, §(b), all found in the Publications tab at:

www.lewinywills.com)

6 See: C olombian_ T ax_ F lash®, September 2009, yr. 6 – No. 17, P.3,

§5, found in the Publications tab at www.lewinywills.com

7 Decree 4145-2009.

8 Tax Reform Act No. 1370-2009. See: C olombian_ T ax_ F lash®,

March 2010, yr. 7 – No. 18, P.1, §(a), found in the Publications tab

at www.lewinywills.com.

9 All US dollars fi gures in this section are approximate values using

a COP $2,000 exchange rate.

10 Tax Reform Act No. 1370-2009. See: C olombian_ T ax_ F lash®,

March 2010, yr. 7 – No. 18, P.2, §(d), found in the Publications tab

at www.lewinywills.com.

11 Colombian Tax Code, §287.

12 All US dollars fi gures in this section are approximate values using

a COP $2,000 exchange rate.

13 Dirección de Impuestos y Aduanas Nacionales” – DIAN, Revenue

Ruling No. 098797 – 2010, issued on December 28, 2010

14 Colombian Tax Statute, §476, last paragraph.

15 Co l o m b i a n Ta x Re f o r m Ac t N o . 1 1 1 1 - 2 0 0 6 . S e e :

C olombian_ T ax_ F lash®, January 2007, yr. 4 – No. 8, P.2 [unnum-

bered item 6], found in the Publications tab at www.lewinywills.

com.

16 In matters of taxation the Colombian Congress had a prolifi c

year-end and in addition to the 2011 Tax Reform Act, many other

changes were introduced in other pieces of legislation enacted

last December, which are not featured herein.

Court Rulings Impact Major Industries in Argentina by Juan Manuel Soria Acuña and Eduardo Aguilera, Mitrani, Caballero, Rosso Alba, Francia, Ojam & Ruiz

Moreno, Buenos Aires, Argentina

Th e year 2010 ended with two rulings that could be construed as fi scal guidelines for two important industries. In Union Pak S.A. s/ recurso de apelación , the National Tax Court established that payments from a local courier to a foreign courier are of Ar-gentine source. In Banco Frances S.A ., the Supreme Court decided that the customs and usage of banks can be taken into account to deduct bad credits.

Taxation of International Courier Services According to a Ruling of the National Tax Court

In Union Pak S.A. s/ recurso de apelación , dated July 6, 2010, but recently published in November, Chamber “C” of the National Tax Court analyzed the business relationship be-tween a local courier (Union Pak S.A.) and UPS Worldwide Forwarding Inc. (UPSWWF) and the source of the income obtained by the latter for its services to the former.



Although the ruling clearly states that at-source with-holding should apply to payments based on agree-ments such as the one Union Pak S.A. and UPSWWF had, the rate of such withholding remains uncertain, as the National Court simply rejected the criteria of the assessment without pointing to a correct one.

Deduction of “Bad Credits” for Banks

Article 87 of the Income Tax Law allows the deduction of “bad credits” according to the customs and usages of the industry. Articles 139 and 142 of the Regulatory Decree established (prior to 2002) the deduction of credits that payments are hard or impossible to enforce according to certain indicators such as bankruptcy, default of other debts, and the disappearance of the debtor, among others.

Th e Fiscal Authority challenged the deductions made by one of the country’s biggest banks: Banco Frances S.A .. According to the taxpayer, all deductions were made by following the industry’s customary proce-dure, which includes: letters to the debtor demand-ing payment and notice of intent to initiate judicial actions, reports from the bank’s attorneys and from companies specializing in credit enforcement. All of the steps prior to the deduction were also suggested by a Resolution of the Argentine Central Bank.

According to the Fiscal Authority, the bank should have proved or established that it had initiated judicial action against debtors prior to deducting the credits. Regarding credits secured by mortgages, the bank should have initiated the foreclosure proceeding.

Th e National Tax Court, in Banco Frances S.A ., dated June 9, 2003, agreed with the Fiscal Authority and confi rmed the tax assessment. However, the Court accepted the deductibility of those credits that the bank claimed to debtors with letters giving notice of the intent to initiate judicial actions. Both the taxpayer and the Fiscal Authority fi led appeals to the Federal Court of Appeals. Th e latter confi rmed the assessment, thus rejecting all of the deductions, including the ones that the National Tax Court had

In 1992, Union Pak and UPSWWF entered into an agreement whereby Union Pak S.A. could access the UPSWWF worldwide distribution infrastructure (which includes transportation and the use of tracking software) in exchange for a fee equal to 67% of the price charged to its customers. In addition, Union Pak S.A. agreed to become a UPSWWF distributor in Ar-gentina. It is worth mentioning that Union Pak S.A. was responsible for the transportation of packages to a UPSWWF distribution point outside of Argentina. In other words, UPSWWF had no permanent estab-lishment in Argentina. In fact, this was the taxpayer’s main defense: the lack of Argentine source income based on the fact that all of the activities carried on by UPSWWF occurred outside of Argentina.

Th e Argentine Fiscal Authority (AFIP) determined that at-source withholding applied to the payments made to UPSWWF. According to AFIP criteria, UPSWWF in-come was of Argentine source because the agreement with Union Pak S.A. indicated that the latter was nothing more than a local representative. Furthermore, the income was produced by an activity that took place partially, but inseparably, in Argentina. Th e applicable withholding rate, according to AFIP article 9 of the Income Tax Law—which regulates international transportation—resulted in an eff ective withholding rate of 3.5%.

Th e National Tax Court agreed with the Fiscal Au-thority. In the Court’s opinion, even if the activities of UPSWWF occurred outside of Argentina, they are essential and necessary to maintain the source of income. Th e service for which Union Pak S.A. was charging its clients could not be performed without UPSWWF and thus payment from the former to the latter represents income of Argentine source.

However, courier services should not be mistaken with transportation services, the Court pointed out. Article 9 of the Income Tax Law does not apply to courier services as this activity has been historically distinguished byits own regulations. Th e intent of AFIP to withhold according to article 9 is somehow punished by the National Tax Court, which in the end rejected the fi scal assessment.

9March 31, 2011


accepted. Th e bank appealed to the Supreme Court which ruled in Banco Frances S.A. (TF 18.280-I) c/ DGI on November 9, 2010, in favor of overturning the decisions of the prior courts.

According to the Supreme Court, the reference to cus-toms and usages contained in Article 87 of the Income Tax Law shows a clear intention of Congress to allow diff erent criteria to identify bad credits depending on the industry. Moreover, the guidelines of the Central Bank, the highest authority among fi nancial institu-tions, cannot be overlooked by courts. Th e taxpayer

followed a reasonable procedure to classify its credits as unenforceable, which was in accordance with the Central Bank guidelines. Th e Fiscal Authority cannot require or expect banks to assume the fi nancial cost that would be generated if certainty of unenforceability has to be shown in order to deduct the bad credit.

In 2002 (after the analyzed assessment), Article 142 (now 136) of the Regulatory Decree was amended. It now includes a list of requisites, not indicators, to deduct bad credits. Th erefore, the eff ects of the ruling of the Supreme Court on future assessments cannot be predicted. ◆

Income Tax and Banking Secrecy in Uruguay by Isabel Laventure, Ferrere, Montevideo, Uruguay

On December 15, 2010, Parliament approved a bill of law introducing changes in the Individual Income Tax (IRPF) and in bank secrecy. Th e new law abandons the traditional “source criterion” for certain income obtained by Uruguayan residents abroad and makes more fl exible the lifting of bank secrecy upon the tax agency’s request.

Individual Income Tax (IRPF)

Individuals residing in Uruguay will now pay IRPF at a 12% rate on income from deposits, loans and placements of capital or credit with entities abroad. Residents are those persons who: i) remain in national territory for more than 183 days dur-ing the calendar year, or ii) have Uruguay as their principle base of activities or interests (for example, when the family—spouses and children—reside in Uruguay).

When income is derived from placements, loans or deposits abroad of foreign companies paying taxes at a rate of less than 12%, such companies are considered pass-through entities. Tax treatment in these cases is as if the company did not exist and the shareholder had received the income directly as it was generated. Uruguayan resident individual shareholders must pay

IRPF even if the company generating the income does not distribute earnings. Th e company will be considered to exist and payment will be deferred until distribution of dividends only when the company generating the earnings pays income tax abroad at a rate of 12% or higher.

Dividends distributed by Uruguayan companies de-rived from income generated by taxable investments abroad will also be subject to 12% IRPF. Dividends are considered to be distributed upon accrual of the pertinent income, unless the entity’s accounting records suffi ciently justify otherwise, in accordance with regulations.

Th e law provides tax credits for taxes paid abroad, in line with the conditions set forth in the regulations, up to a 12% ceiling.

Foreign source “net worth increases” will continue to be exempt from IRPF. Hence, the sale of assets located abroad will not be taxable. Consequently, if a Uruguayan tax resident owns shares of a foreign company s/he will not have to pay IRPF upon sale of the shares. Similarly, increases in the value of shares or placements abroad will not be subject to IRPF.



Th e changes only aff ect individuals. Uruguayan com-panies will continue paying taxes in Uruguay only on “Uruguayan source” income.

Lifting of bank secrecy —The law includes changes in bank secrecy for tax purposes. As of 2007, bank secrecy could be lifted for tax purposes only in two cases:

1) In the context of preliminary measures or execu-tory actions where tax authorities (DGI) or the social security administration (BPS) petitions the court to attach the taxpayer’s bank accounts without the need to identify them specifi cally.

2) In the context of criminal proceedings for tax fraud.

Th e new law incorporates two new grounds for lifting bank secrecy at the DGI’s request.

Th e bill sent to Parliament established that the DGI could request lifting of bank secrecy when it consid-ered it necessary in order to verify the veracity and

completeness of taxpayers’ tax declarations or in the framework of tax information exchange treaties.

Regarding the fi rst of the grounds for lifting secrecy, the law that was approved establishes that the DGI can petition the courts to lift bank secrecy provided it accredits existence of objective indicia leading to a reasonable presumption of existence of evasion. Since Uruguayan law does not defi ne the term “evasion,” its interpretation will be left to the courts.

Bank secrecy can be lifted at the request of foreign tax au-thorities only in the case of countries with whom Uruguay-an has signed a treaty for exchange of tax information.

In any event, fi ling of an appeal against a fi rst-instance ruling ordering lifting of bank secrecy has suspensory eff ect (i.e., bank secrecy will not be lifted until the ruling is confi rmed by the Appeals Court).

Th e new grounds for lifting bank secrecy will apply only to transactions performed as of January 1, 2011. ◆

Transfer Pricing and Long Term Investment in Brazil by Luis Rogério Farinelli, Ana Lúcia Marra, Tatiana Villani, Machado Associados e Consultores, São Paulo, Brazil

Recent Legislative Changes to Foster Long-Term Investment

On December 30, 2010, the federal government implemented several changes to federal legislation by means of Provisional Measure No. 517/2010 (“MP 517/10”), Law No. 12,375/10 (“Law 12375/10”) and Decree No. 7,412/10 (“Decree 7412/10”), which encompass not only tax matters but also amendments to corporate and civil legislation.

Said acts are part of the tax package disclosed by the federal government on December 16, 2010, which aimed to foster long-term fi nancing of the Brazilian economy. We summarize below the main tax aspects of each of these acts.

MP 517/10—Investments in Bonds, Securities, Debentures and Investment Funds

Income 1 derived from bonds and securities that are (1) acquired as of January 1, 2011 2 , (2) publicly placed; (3) issued by a private legal entity (not a fi nancial institution), (4) governed by the Brazilian Securities and Exchange Commission (“CVM”) and by the National Monetary Council (“CMN”), (5) remuner-ated at a prefi xed interest rate or pegged to a price index or to taxa referencial (“TR” 3 ), shall be subject to a 0% withholding income tax rate provided some conditions described in the law are cumulatively met, amongst which we highlight: (a) income is paid to a benefi ciary that resides or is domiciled abroad (payments to tax havens 4 are excluded from this benefi t) and (b)

11March 31, 2011


such bonds and securities have a weighted average term of more than 4 years.

Besides, income from debentures issued within the date of the regulation’s publication up until December 31, 2015, by special purpose companies (“SPE”) set up to implement infrastructure projects 5 , shall be subject to an income tax, to be withheld exclusively at source 6 , at a rate of:

1) 0%, when paid to an individual resident or domiciled in Brazil; and

2) 15%, if the benefi ciary is a legal entity (exempt or subject to any of the tax calculation methods - SIMPLES, actual, deemed or arbitrated profi t regimes).

It is important to note that MP 517/10 has also modi-fi ed some provisions of Law No. 6,404/76 (Corporate Law) regarding the issuance, amortization and redemp-tion of debentures and of debenture holders’ trustees. Apparently these changes were made to harmonize the corporate legislation with the modifi cations introduced in the taxation of debentures income.

With regard to investment funds , MP 517/10 estab-lished that the income arising from quotas of funds which invest at least (1) 85% of its net worth in de-bentures issued by an infrastructure project SPE (as described above) or (2) 95% of its net worth in fund quotas that comply with the requirement of item (1), shall be subject to an income tax, to be withheld exclusively at source, at a rate of:

1) 0%, when paid to benefi ciaries resident or domiciled abroad (except for tax havens) and individuals resident or domiciled in Brazil; or

2) 15%, if paid to a legal entity (exempt or sub-ject to any of the tax calculation methods - SIMPLES, actual, deemed or arbitrated profi t regimes).

On the other hand, gains resulting from the alienation of quotas of infrastructure private equity investment funds (“FIP-IE 7 ”) or quotas of an investment fund that

invests in FIP-IE quotas, in transactions performed or not in the stock exchange, shall be taxed at:

1) 0% rate when earned by an individual. It is no longer necessary to maintain these quotas for at least 5 years to make use of this benefi t; and

2) 15% rate when earned by a legal entity, with no modifi cation of the previous rule.

Law 12375/10—Extension of the Cumulative PIS and COFINS Regime

As per Law 12375/10, revenues from the perfor-mance of civil construction works, by management, contracting or subcontracting, will remain excluded from the non-cumulative PIS and COFINS regime until December 31, 2015. Before such law, the deadline for the application of such regime on these revenues was December 31, 2010.

Decree 7412/10

Decree 7412/10, in force as of January 1, 2011, con-solidated and introduced some changes on the regula-tion of the tax on fi nancial transactions (“IOF”), more specifi cally on the rates of the IOF due on exchange operations (“IOF-exchange”). Although the general 0.38% IOF-exchange rate has been maintained, the main modifi cations concern the following:

1) the outfl ow of funds related to foreign loans and fi nancing raised prior to October 23, 2008 now benefi ts from a 0% rate, as Decree 7412/10 eliminated the requirement that the infl ow of such funds should have occurred before this date;

2) extension of the 0% rate to all foreign exchange transactions for the remittance of interest on equity and dividends to a foreign investor , which previously did not apply to the direct foreign investments;

3) application of a 2% rate on exchange transac-tions carried as of January 1, 2011;

4) the 0% rate applicable to foreign exchange transactions carried out by a foreign investor for



the outfl ow of funds invested in the fi nancial and capital markets was extended; and

5) restriction of the 0% rate on the simultaneous exchange transactions performed by an institu-tion operating in the foreign exchange market 31, 2012 can make use of this tax regime up until June 30, 2014.

Law 12,350 is pending of regulation and there are several uncertainties about the scope and use of tax benefi ts provided therein.

Transfer Pricing Highlights

New Decisions on Transfer Pricing Rules —A re-cent and unpublished decision by the Administrative Council of Tax Appeals (CARF) is creating contro-versy in the transfer pricing fi eld. Th is was the fi rst case where CARF had to decide on the validity of a tax assessment grounded on the rules Normative Instruction 243 (NI 243) established for the Brazil-ian Import Resale Minus Method with a 60% profi t margin (PRL 60), applicable when the imported item is used in the production.

Th e general expectation was that the rules of NI 243 defi ning how the value added in Brazil should be considered in the benchmark calculation would be considered unlawful because these norms devi-ated from the wording of Law 9430. Th erefore, a tax assessment with such grounds would also be deemed unenforceable.

Th e decision, however, surprised most tax practi-tioners. Although we have not had access to the full text of the decision, we are aware that the tax assessment was considered valid by the casting vote of the presiding judge, who is always a representative of the tax authority. It is also noteworthy that some important aspects of the controversy might not have been analysed due to particularities of the case.

Furthermore, when the Regional Federal Court in São Paulo analysed the same matter, the outcome was completely diff erent. On that occasion, the judges

decided that NI 243 was indeed illegal, as it had set forth rules that were not prescribed in law.

As a consequence, Brazilian taxpayers are still uncer-tain of the formula to calculate the PRL 60.

Currency Exchange Variation Adjustment —Finance Ministry Ordinance No. 4, issued on Janu-ary 17, and Normative Instruction 1124 (NI 1124), issued on January 21, allow 2010 export revenues to be multiplied by 1.09 in the following cases: (1) Domestic Market Safe Harbor, which establishes that controlled export transactions shall only be subject to a transfer pricing method if their price is less than 90% of the domestic market price for the same goods, services or rights; (2) the Mini-mum Profi tability Safe Harbour, which relieves Brazilian taxpayers from applying one of the export methods, if their net profi t in controlled export transactions is equal to, or is more than, 5% (this does not apply to low tax jurisdictions); and (3) the Brazilian Cost Plus Method applicable to exports (CAP method).

Th e main purpose of this adjustment is to counter-balance the increase in the real/dollar rate, which may have adverse transfer pricing eff ects. Th erefore, by increasing the values of export revenues, meeting the required standard becomes easier and, conse-quently, Brazilian export transfer pricing adjust-ments can be reduced or eliminated accordingly.

Furthermore, as in previous years, NI 1124 allows the Minimum Profi tability Safe Harbour of 2010 to be calculated based exclusively on data from that year, instead of the triennial average required by NI 243, as amended. Lastly, NI 1124 clarifi es that both calculations (annual and triennial) may benefi t from the 1.09 factor for 2010 export revenues. ◆

1 Meaning “any amount that consists in remuneration of funds in-

vested, including those from variable income investments, such as

interest, bonus, commissions, premium, discount and profi t shar-

ing, as well as the positive results derived from investment funds

and investment clubs referred to in article 73.” ( “a” of paragraph

2 of article 81, Law No. 8,981/95)

13March 31, 2011


2 Investments made before January 1, 2011, may also benefi t from

the 0% rate as long as they meet the requirements established

in MP 517/10.

3 Rate calculated based on an average of some bonds issued by

commercial banks.

4 Federal Revenue Service Normative Instruction No. 1037/10

lists the countries and jurisdictions that are considered as tax

havens.

5 Considered a priority by the regulation to be issued by the Execu-

tive branch.

6 Meaning that the income will not be computed in the income tax

return and, thus, the tax withheld cannot be compensated in such

return.

7 FIP-IE is a closed fund for qualified investors, whose portfolio

is formed by shares of privately held or publicly held Brazil-

ian corporations with investments in certain infrastructure

projects.

8 As for durable goods and equipment (to be listed by a forth-

coming regulation), the Law provides for the suspension of

federal taxes and duties if they are imported under a special

customs regime.

Th e Chilean Internal Revenue Service established in ruling No. 1935, dated October 25, 2010, the tax treatment applicable to the repatriation of capital contributed to a Chilean company by a person not domiciled in Chile via the transfer of intangible as-sets, such as the transfer of a number of environmen-tal engineering studies and others plus the amount representing the operational expenses related to such studies.

It is worth noting that operations involving a capital reduction must be previously authorized by the Chil-ean Internal Revenue Service.

As stated in the Income Tax Law, article 17, num-ber 7, the repatriation of capital contributed to a company via the transfer of intangible assets will constitute revenue not representing income for the contributor, provided that the entity repatriat-ing the capital does not have taxable profi ts (either capitalized or not) or fi nancial profi ts in excess of taxable profi ts and that neither the Global Aggregate Tax nor the Withholding Tax have been imposed on the same.

The parties should determine whether or not the recipient of the capital contribution has taxable profits, if not, financial profits retained in excess of taxable profits in which case the capital repa-triation will be firstly imputed to them and the

appropriate tax paid. In other words, in a capital repatriation, sums are first imputed to taxable profits, if there are not any taxable profits sums are then imputed to financial profits retained in excess of taxable profits, however, if none of the above exist, then the total sum may be imputed to a capital repatriation.

In consideration to the above, the company making the contribution shall recognize in the results the revenue triggered by the asset disposition. However, it will be able to deduct as cost the carrying value of transferred assets.

Finally, article 30 of the Income Tax Law es-tablishes that the amount transferred represents operational expenses that for tax purposes con-stitute the acquisition cost of the intangible as-sets provided that acquisition cost relates to the acquisition of rights or privileges representing a real investment rather than the appreciation of the taxpayer.

Applicability of the Tax Invariability Clause under a Foreign Investment Contract Pursuant to D.L. 600 1

Ruling No. 25, dated October 25, 2010, establishes the rate applicable to remittances abroad under D.L. 600 contracts, including an overdue ten year tax invariability clause.

Capital Repatriation in Chile by Jorge Espinosa Sepulveda, Espinosa y Asociados, Abogados y Consultores, Santiago, Chile



As expressed by the Internal Revenue Service, With-holding Tax 2 is accrued the year in which remittances are made regardless of the period in which profi ts have been triggered. Likewise, if funds are remitted to a person not domiciled or resident in Chile then the provisions set forth in article 74, number 4 of the Income Tax Law shall be fulfi lled—that is, a 35 per cent withholding should be made for profi ts with credit rights for the First Category Tax paid by the company that distributes the dividends or profi ts, as the case may be.

In this case under analysis and considering that the last DL 600 contract was entered into in 1990 with a ten year invariability clause, we must conclude that profi ts remitted abroad are subject to the withholding referred to above, regardless of the whether profi ts were triggered when the company was under the tax invariability regime as the tax is accrued when profi ts are distributed not triggered at the rate in force the relevant fi scal year.

Taxability of Payments Delivered by a Chilean Affi liate to an Overseas Parent

Th e Chilean Internal Revenue Service addressed in ruling No. 2115, dated November 19, 2010, the tax treatment applicable to these remittances according to the origin of payments made.

In the event disbursements are made in order to comply with the parent’s guidelines, orders or instruc-tions of the parent as the affi liate’s controlling entity, remittance thereof will not be deductible as expenses as the same are not deemed necessary to produce the affi liate’s income.

Now, for remittances related to services rendered by the parent to the affi liate, the Withholding Tax will levy the same at the general 35 per cent rate which is calculated over the total sums paid. Th ere are no deductions whatsoever when these remittances relate to services rendered abroad by persons with no domi-cile or residence in Chile and to payments for services rendered overseas.

Remittances abroad will be deductible as ex-penses only if such expenses are deemed neces-sary to produce income pursuant to article 31 of the Income Tax Law. In this regard, expenses are deemed necessary to produce income if: (1) they have not been previously deducted as cost; (2) they are either paid or indebted; (3) they oc-curred during the relevant commercial year; and (4) they are duly proved to the Chilean Internal Revenue Service. In this particular case, as ex-penses occurred abroad, the proof shall consist in documents issued abroad under the regulations of the relevant country.

In addition, services should have been eff ectively rendered and if not rendered by the parent directly, the need to hire a diff erent service provider shall also be proved.

Finally, the ruling mentioned above states that while the Internal Revenue Service has expressed that reimbursements of reasonable expenses in-curred by a principal are not subject to Withhold-ing Tax, it may request that a number of conditions are met in order to prove that funds remitted are eff ectively expenses being reimbursed to the princi-pal. Th ereby, a written power of attorney proves of the essence to demonstrate that remitted amounts actually represent expense reimbursements.

Applicable Taxability of Certain Commissions with regard to Withholding Tax

Th e Chilean Internal Revenue Service addressed the tax treatment applicable to certain commissions in relation to the Withholding Tax in Ruling No. 2116, dated November 19, 2010

Pursuant to Article 59 of the Income Tax Law a 35 per cent Withholding Tax rate is levied on remunerations paid for services rendered abroad. Nevertheless, there is an exemption applicable to “commission” 3 payments. Now, only those opera-tions duly informed to the Internal Revenue Service as well as the conditions of the same within the

15March 31, 2011


relevant period are entitled to this exemption. It is worth noting that the IRS has the right to chal-lenge the referred values if they are not consistent with regular market values.

According to the Internal Revenue Service the word “commission” as used in article 59 of the Income Tax Law refers only to mercantile commissions according to the regulations set forth in the Code of Commerce, that is to say, payments for civil act mandates are subject to Withholding Tax under the general rules. Th erefore, it is the nature of the act what determines if the mandate is commercial or civil. Notwithstanding the foregoing, article 3 of the Code of Commerce states that all acts destined to complement the most signifi cant operations of a commercial company will be regarded as com-mercial even if they could be classifi ed as civil based on the nature thereof.

In conclusion, the Withholding Tax exemption set forth in the Income Tax Law shall apply in the first place to mandates relating to mercantile operations or those that complement the most significant operations of a commercial company; in the second place the taxpayer shall provide information regarding the conditions of the opera-tions within the period provided to that end by the Internal Revenue Service which is presently by June 30 of the following year. In any case, the Internal Revenue Service may challenge the reported values if they are not consistent with fair market values.

Withholding Tax Levied on Remittance of Interest

In Ruling No. 2124, dated December 19, 2010, the Internal Revenue Service specified who is the person obligated to withhold, file and pay the Withholding Tax levied on interests remitted abroad pursuant to the regulations of the Income Tax Law.

In this case, interest is paid by companies to their foreign creditors for which purpose they

acquired from a local bank the required foreign currency to make such payments and remit funds to their creditors.

The question to the Internal Revenue Service is intended to determine whether the debtor or the bank is the person in charge of withholding, filing and paying the tax associated with the pay-ment of interests, which, according to article 59 of the Income Tax Law, are subject to Withhold-ing Tax the rate of which will vary depending on to whom the remittance is made 4 . Likewise, this question intends to clearly establish who is in charge of filing the Sworn Statements required by the law.

In consideration to the fact that Withholding Tax levies persons with no domicile or residence in Chile, the law has provided for a withholding mechanism according to which those remitting the funds are responsible for withholding the appropri-ate rate. In this particular case, payment is made by the taxpayer not the bank that is not the legal interest payer and only acts as an intermediary for purposes of remitting the funds. The same applies to the Sworn Statement that must be completed and sent by the taxpayer. ◆

1 DL 600 establishes the Foreign Investment Statute Regula-

tions where investors may select an effective fixed overall

tax rate of 42% for a ten year period instead of the 35%

withholding tax rate. In 2005 Law No. 20.026 introduced an

amendment as a result of which there are more and better

benefits for investments over USD 50,000,000 to be used in

mining projects.

2 Withholding Tax levies Chilean source incomes earned

by natural or legal persons with no domicile or residence

in Chile.

3 Commission shall be regarded as the commercial mandate

involving one or more mercantile operations. Article 235 of

the Code of Commerce.

4 Article 59 establishes a general 35% rate. Number 1 let-

ter b) states a 4% rate when funds are loaned by foreign

or international banks or financial institutions. Also if the

two countries involved have signed a convention for the

avoidance of double taxation is a matter that needs to be

taken into consideration. Otherwise, the general rule shall

apply.

5 If agreements are entered into by unrelated parties, the rate

applicable to remittances for these types of services is 15%.



“Gasolinazo” in Bolivia by Ramiro Guevara, Guevara & Gutiérrez S.C. Servicios Legales, La Paz, Bolivia

rates are reviewed every year. Th e tax is applied over the sale and imports of cigarettes, tobacco, vehicles, alcoholic beverages and other sumptuous goods.

Tax Administration Board Resolutions

Administrative Resolution N° 10.0028.10 , issued December 7, 2010, sets forth the procedure for the pay-ment online of tax obligations, carried out by Newton Taxpayers, who use a Financial Entity’s Portal, who must present their Sworn Statements or Payments Slips by means of the Internal Revenue’s Tax Portal.

Administrative Resolution N° 10.0030.10 , December 23, 2010, updates the Airport Tax imposed on Trips Abroad to Bs. 231, which shall be applicable as of January 1, 2011.

Administrative Resolution N° 10.0031.10 , Decem-ber 24, 2010, updates the maximum rate by litter or equivalent unit, stipulated for the Tax on Special Hy-drocarbons and their Derivatives, to Bs. 5, 34, which shall be applicable as of January 1, 2011.

Resolution N° 10.0032.10 , issued December 24, 2010, updates the Corporate Tax rate corresponding to the 2010 term, for individuals who provide interstate public transportation services for passengers and freight, according to the type of vehicle and freight capacity.

Administrative Resolution N° 10.0033.10 , issued December 28, 2010, updates the specifi c rate for products taxed by the Specifi c Consumption Tax, detailed in Supreme Decree No. 0744, which shall be applicable as of January 1, 2011.

Administrative Resolution N° 10.0034.10 , issued De-cember 30, 2010, sets forth the form of declaration and payment of the Specifi c Consumption Tax with specifi c and/or percentage rates. ◆

Just a few hours before New Year 2011, President Evo Morales gave a press conference where he left without eff ect Supreme Decree Nº 748 (dated December 26, 2010) in which the government had decided to cause gasoline, diesel, jet fuel, and vehicular natural gas prices to skyrocket with an increase of 57% to 82%. Th e reason behind said measure was that Bolivia had been spending over 380 million dollars subsidizing fuel each year and, supposedly, most of it had been sold outside of Bolivia. Th e decree, of course, led to a nationwide bus and transport strike that almost paralyzed the country during the end of year holidays. As a result of the above and more pressure from other sectors, the measure was overruled and the prices were lowered to reach their initial numbers.

Although the government has not announced any tax mea-sures to be implemented in order to generate new income (as it was the decree’s main purpose), some government offi cials have unoffi cially stated that a new tax reform may be incorpo-rated in the form of a personal income tax to be implemented on individuals with high income. Th e fi rst step into the pos-sible reform was the amendment of the Pension Fund Law, which sets forth a series of obligations for the aforementioned individuals whose income is higher than the average.

Although fuel prices have returned to normality, food prices that had also risen up to 15% and are slowly de-creasing causing more distress in the public as people are seeking bargains lined up at a state-run food stores.

Enacted Laws

Law Nº 066, dated December 15, 2010 —Modifi es the tax rate for the Specifi c Consumption Tax corresponding to every product contained in Table 1 of Paragraph I of the Annex to article 79 of Law No. 843 (Tax Code, approved by means of Supreme Decree No. 27947, dated December 20, 2004), which was substituted by article 2 of Law No. 3467, dated September 12, 2006. Th e Consumption Tax

17March 31, 2011


event established by law takes place. Once pro-duced, it must be paid in the time and manner indicated by law. If the tax obligation is not fulfi lled in time, then the receipt of interest and the imposi-tion of sanctions, established by legal entities, shall proceed. Payments in advance are not a separate tax; it is not an independent obligation, merely a secondary one which depends on the Income tax.

According to the law, income tax is determined at the end of the fi scal year, which means that when the payments in advance are fulfi ll the taxable event of the income tax law has not yet been determined.

In this sense, Tax Authorities could not charge inter-est on a pecuniary obligation which has not yet been born. Th is, as obvious as it may sound, is what the First Chamber of the Supreme Court established. Advance payments are no more than just advanced payments of the Income Tax, for there would be no way that paying them overdue could carry interest.

As a result, by no means the taxpayer may be required to pay interest on a non-existent obligation. Partial payments are not a tribute itself and, therefore, there is no reason to generate an interest. ◆

Costa Rican Income Tax Law establishes the obliga-tion of taxpayers to comply with advance income tax payments on a quarterly basis. Th ose advance pay-ments shall be calculated using the income tax given the previous tax year.

In the past, the Costa Rican Tax Authorities have held that failing with advance income tax payments brings the charging of interests. However, in resolution No. 000798-F-S1-2010, the First Chamber of the Su-preme Court established that failing to comply with such payment is not subject to an interest penalty.

Th e decision was fully justifi ed for several reasons. First, there is no law authorizing interest or penal-ties in cases where a taxpayer fails to fulfi ll advance payments on the date stated by Law. According to the legal reserve principle ( principio de reserva de ley ), the Government, as the active subject of tax liability, can create, modify or eliminate taxes only by law. In other words, the law sets no interest charges when a taxpayer fails to comply with the advance payments.

Moreover, taxes are obligations that arise between the Government and taxpayers when a specifi c

Corporate Transactions in the Dominican Republic by Norman de Castro, Milciades Rodriguez, and Adolfo Toca, Pellerano & Herrera, Dominican Republic

Failure to Comply in Costa Rica by Ana Lidia Fallas, Facio & Cañas Abogados, San José, Costa Rica

Decree 408-10 serves to clarify the criteria by which the Tax Administration classifi es the operations and trans-actions made by corporations in order to arrange their assets or legal structure. Th is decree thoroughly defi nes and details every possible corporate concentration op-eration and the tax obligations pertaining to them.

Its objective is to amend several problems that arise for the Tax Administration when verifying the

applicable tax treatment at the moment of executing some transactions, since the Dominican Tax Code treats several economic operations as corporate re-organizations, including the entities resulting from such operations.

In addition, Law No. 479-08 on Commercial Entities and Limited Liability Companies, was enacted on December 10, 2008, and though it served as an update of the corporate



vehicles used for business within the Dominican Republic, it introduced new legal fi gures, such as the Limited Liability Companies, and made use of concepts such as economic group, parent companies, subsidiaries and affi liates, without properly defi ning the applicable tax treatment.

According to this decree, a corporate concentration by co-ordination is defi ned as the union of corporations, through verbal or written agreements, that maximizes their eventual mutual benefi ts, where each member keeps their economic and legal autonomy (e.g. consortiums and economic in-terests groups). Th ese structures will have to identify their members, designating a single representative before the Tax Administration, who will be in charge of complying with the payment of taxes over the benefi ts or utilities mutually obtained by the consortium or economic interest group, in the activities set forth in their agreement.

Secondly, economic groups will be classifi ed as corpo-rate concentrations by subordination when they are formed by the union of companies under economic or legal control of one over the other, and the estab-lishment of a unifi ed management.

Decree 408-10 gives the Tax Administration the right to verify the relationship between the companies, as well as the type of control exerted over the group they form, be it legal or factual, in order to declare the existence of an economic group. Th is declaration, made by a properly motivated administrative resolution, can regulate every aspect of the economic group’s tax obligations, including the treatment of their accounting records and even how they will have to present their tax forms. An interesting aspect of this particular provision is the fact that the tax-payer, after providing suffi cient proof, can request to the

Tax Administration to be declared as an economic group. Th e declaration of an economic group will be considered ineff ective as soon as the Tax Administration verifi es that the legal or factual control ceased.

Regarding parent companies, these will be considered as such for as long as they are not exclusively dedicated to the management, direction or coordination of the activities of their subsidiaries or affi liates, or the ownership of their shares, in which case they will be considered as a holding company . Holding companies will only have to present the VAT declaration, since their income is considered as retained at the source by the companies which they manage, own shares or have invested in. If an operation is reported in the declara-tions of a holding company but the Tax Administra-tion verifi es that this was only to benefi t or cover up the operations of another affi liate or subsidiary within the economic group, the Tax Administration has the right to reassign this operation to the correct entity and therefore it will have to comply with the payment of the applicable tax.

Mergers, spinoff s or transfer of assets or goods within an economic group will be considered as corporate reorganiza-tion activities and will therefore be tax exempt, for as long as there is a previous authorization from the Tax Administra-tion on this regard, which is subject to the verifi cation of aspects such as similarity of the operations of the involved entities, valid economic reason behind this reorganization [not just for the purpose of reducing their tax obligations or obtaining tax advantages], and last but not least, that the entities involved were operational during the last year before the execution of the reorganization, which will be verifi ed based on their last tax declaration. ◆

Treatment of Dividends, Profi ts, or Benefi ts Obtained by Individuals in Ecuador by César R. Holguin, LawNetworker S.A. Asesores Legales, Guayaquil, Ecuador

Th e IRS has issued Resolution No. NAC-DGEC-CGC11, dated within the last days of December 2010,

outlining the treatment of dividends, profi ts or benefi ts obtained by individuals since 2010.

19March 31, 2011


Where accounting book maintenance is required and shares are registered, Ecuadorian Accounting Standards (NEC) mandate that dividends must be recognized when the right of the shareholder to receive the divi-dends is also recognized. Th erefore, the shareholder must register his dividends and profi ts at the moment when the Corporation that distributes them recognized his right to receive payment.

Where a taxpayer is not required to maintain ac-counting books or where the taxpayer is required to maintain accounting books but, due to their entrepreneurial activity, does not register shares in the book (alleging that the shares do not correspond to their business activity), the taxpayer should have recognized the income and therefore registered the dividends of profi ts in his income & expenditure account at the time he received payment.

According to Article 50 of the Internal Revenue System Law (the Tax Law) at source withholding must be eff ected at the time of payment or credit into account whichever occurs fi rst. In this case the accounting registry made by the Corporation that distributes the profi ts comes fi rst; hence this will be the moment when the withholding agent must with-hold the applicable tax. Th e tax withheld constitutes tax credit for the benefi ciary for the tax year in which the dividend was received or registered.

For those anticipated payments of profi ts, dividends or benefi t made during the 2010 tax period, before the enactment of the new General Regulation to the Tax Law, the applicable withholding percentage was of 2% of the taxable income.

According to literal e) of Article 36 of the Tax Law for purposes of determining the tax credit to be granted to taxpayer for the tax paid by the Corporation that dis-tributes the dividends, profi ts or benefi ts, the LESSER VALUE of the following items must be considered:

1) Tax paid by the Corporation, corresponding to the dividend;

2) Rate of Corporate Income Tax applicable to Corporations, multiplied by the amount con-sidered as taxable income; and

3) Th e income tax due corresponding to the indi-vidual for that income within his global income; in other words, the resulting diff erence from subtracting the tax due in his global income, including the total amount of the dividend, minus the tax due in his global income, if such dividend or benefi t are not considered.

When an individual receives dividends distributed by more than one Corporation established in Ecuador, for purposes of determining his tax credit for the tax paid on his behalf for the Corporations, it must be considered:

INCOME TAX BRACKETS 2011

Taxable

Income

exceeding

Taxable

Income not

exceeding

Tax on lower

amount

Rate on

excess

9,210 - 0%

9,210 11,730 0 5%

11,730 14,670 126 10%

14,670 17,610 420 12%

17,610 35,210 773 15%

35,210 52,810 3,413 20%

52,810 70,420 6,933 25%

70,420 93,890 11,335 30%

93,890 And on 18,376 35%

TAX BRACKETS FOR INHERITANCES,

DONATIONS AND LEGACIES 2011

Taxable

Income

exceeding

Taxable

Income not

exceeding

Tax on lower

amount

Rate on

excess

58,680 - 0%

58,680 117,380 0 5%

117,380 234,750 2,935 10%

234,750 352,130 14,672 15%

352,130 469,500 32,279 20%

469,500 586,880 55,753 25%

586,880 704,250 85,098 30%

704,250 And on 120,309 35%



1) Th e sum of the corresponding portion of the taxes paid by those companies in which he is a shareholder;

2) Th e corporate income tax rate applicable for corporations, multiplied by the sum of the amounts considered as taxable income; and

3) Th e income tax due corresponding to the indi-vidual for that income within his global income; in other words, the resulting diff erence from subtracting the tax due in his global income, including the total amount of the dividends, minus the tax due in his global income, if such dividend or benefi t are not considered.

According to the tax law, it is understood that when a Trust delivers benefi ts, directly or indirectly to individu-als residents in Ecuador or to corporations domiciled in tax haven or low tax jurisdictions, benefi ts that have

been originated in the perception of dividends or profi ts distributed by Ecuadorian resident companies, these will be regarded as dividends received by the individual shareholders and thus subject to the treatment set forth in the Tax Law and its Regulations. Likewise, according to the tax legislation establishes that corporate income tax to be levied to Corporations will be regarded as at-tributable to their shareholders or partners, when the latter are companies domiciled in tax haven or lesser taxation jurisdictions, but in these cases the additional withholding at source of 10% will apply.

Notwithstanding the above, this 10% additional withholding tax shall also be considered as a tax credit for individual residents of Ecuador, who re-ceive dividends sourced from national corporations to corporations domiciled in tax havens or in low tax jurisdictions. ◆

Modifi cations to Puerto Rico Estate and Gift Tax Regime and Excise Tax by Fernando Goyco and Vanessa I. Raffucci-Vázquez, Adsuar Muniz Goyco Seda & Perez-Ochoa, P.S.C.,

San Juan, Puerto Rico

the executor of the estate timely pays all Puerto Rico tax debts that accrue after the date of death. For this purpose, Puerto Rico tax liabilities consist of income, property and municipal license tax liabilities of the deceased or the estate and of any legal person in which the deceased owned at least 10% of its shares of stock or equivalent equity interest.

Since the estate tax exemption on “property located in Puerto Rico,” continues to be applicable under the New Code, the availability of the credit allows the residents of Puerto Rico to invest in property located outside of Puerto Rico and of the United States without the specter of a United States or Puerto Rico estate tax. Th e New Code also modifi es the defi nition of the “property located in Puerto Rico” that is exempt from estate and gift tax and increases the fi xed $400,000 estate tax exemption.

Th e recently enacted Internal Revenue Code for Puerto Rico (the “New Code”) contains signifi cant modifi cations to the estate and gift tax provisions formerly applicable under the Puerto Rico Internal Revenue Code of 1994 (the “PR-IRC”). Th e new regime is applicable retroactively to the estates of individuals who passed away after December 31, 2010, and gifts made after such date.

Th e most signifi cant change of the New Code is the imposition of a 10% fi xed tax upon the taxable estate and taxable gifts of residents of Puerto Rico, in lieu of the progressive tax rates of the PR-IRC of up to 50%. Signifi cantly, the New Code grants a credit against the estate tax that fully off sets the 10% estate tax. Th e credit is applicable to the estates of residents of Puerto Rico who did not have any existing Puerto Rican tax liabilities at the time of death¸ so long as

21March 31, 2011


Th e most notable change to the defi nition of “property located in Puerto Rico” is that the shares of stock of a corporation organized in Puerto Rico and the partner-ship interests in a partnership organized in Puerto Rico held by a stockholder or partner that owns more than 10% of the issued and outstanding shares or partner-ship interests, will not automatically qualify as “property located in Puerto Rico” exempt from estate and gift taxes. For estate tax purposes, such shares and interests qualify for the exemption only if, during the three taxable years preceding the death of the deceased (i) the corporation or partnership, as applicable, derived 80% or more of its gross income from the “exploitation of a trade or business” (the “80% Test”), or (ii) all of the assets of the corporation or partnership, as applicable, constitute “property located in Puerto Rico”, as defi ned in the New Code (the “Assets Test”). In determining whether the 80% Test is met, the gross income of corporations or partnerships more than 50% owned (directly or in-directly) by the Puerto Rico corporation or partnership, must be taken into account. While the phrase “exploita-tion of trade or business” is not defi ned, corporations and partnership engaged in a passive leasing business, securities investment business or that own a signifi cant portfolio of securities, may not meet the 80% Test. Like-wise, since the Assets Test requires that “all” of the assets constitute “property located in Puerto Rico,” as defi ned in the New Code, extreme caution and monitoring will be required to ensure that the test is met.

For gift tax purposes, the Assets Test is not applicable. Th us, if the 80% Test is not met, the gift tax is ap-plicable to the gift.

Finally, it is worth noting that United States bonds were excluded from the defi nition of “property located in Puerto Rico” for estate tax purposes.

New 1% Excise Tax on Purchases of Tangible Personal Property

Contributed by Vanessa I. Raff ucci-Vázquez

Th e recently enacted Internal Revenue Code for Puerto Rico (the “New Code”) includes a new excise

tax (the “New 1% Excise Tax”), payable by the buyer, on all purchases from “related persons 1 ” of tangible personal property used or to be used in a trade or business. Th e New 1% Excise Tax would be 1% of the total invoice price of the tangible personal property and is applicable to purchases of tangible personal property, regardless of whether the property is im-ported or purchased locally.

Exemptions —Th e New 1% Excise Tax would not be applicable to buyers (i) with “gross receipts” of less than $50,000,000 from their trade or businesses in Puerto Rico during any of the three (3) preceding taxable years, or (ii) covered by a tax exemption grant issued under Act No. 73 of May 28, 2008 or any pre-ceding or subsequent similar law. For this purpose, the term gross receipts is defi ned as the total receipts from the sale, lease or rental of property held primarily for sale, lease, or rental in the ordinary course of trade or business, and gross income from all other sources.

Tangible Personal Property subject to the New 1% Excise Tax —All purchases of tangible personal property used in a trade or business would be sub-ject to the New 1% Excise Tax, except for alcoholic beverages, raw materials and intermediate products to be used in a manufacturing process. Th e New 1% Excise Tax would be in addition to the current sales and use tax (the “Sales and Use Tax”) and the excise taxes assessed upon the importation or manufacture of certain articles used, sold, consumed, conveyed or acquired in PR (the “Current Excise Taxes”). Th us, the purchases of articles subject to the Sales and Use Tax and Current Excise Taxes would also be subject to the New 1% Excise Tax, as long as (i) the articles are purchased from related persons to be used in buyer’s trade or business, (ii) buyer’s gross receipts meet the $50,000,000 threshold, (iii) and buyer’s operations are not covered by a tax exemption grant.

Time of Payment and Penalties —Th e New 1% Ex-cise Tax would be payable by the buyer on or before the 15th day of the month following the purchase of the personal property. Failure to pay the New 1% Ex-cise Tax when due, entails the assessment of a special



penalty equivalent to 2% of the amount due for every 30 day period or fraction thereof during which the omission prevails, up to a 24% maximum. Th is pen-alty would be assessed in addition to the regular 10% interest and any other penalty or surcharge authorized by the New Code.

Anti-Abuse Rule —Th e Secretary of Treasury is authorized to invalidate any transaction or series of transactions or arrangements between corpo-rations, partnerships and other affi liates, one of which principal purposes would be to circumvent the application of the tax. Th us, if a transaction or business structure is organized with a legitimate business purpose, but one of its principal purposes

is the avoidance of the New 1% Excise Tax, the Secretary of Treasury is empowered to disregard the transaction or business structure and assess the New 1% Excise Tax with all applicable, interest, surcharges and penalties. ◆

1 For purposes of Section 3080.01, the term “related person”

includes: (i) a member of a controlled group of corporations

with a common parent company; (ii) a corporation where

buyer owns, directly or indirectly, at least 50% of the value of

the shares of stock of such corporation; (iii) a corporation that

owns directly or indirectly at least 50% of the value of buyer’s

shares of stock; (iv) a corporation of which at least 50% of the

value of its shares of stock is owned by a person who directly

or indirectly owns at least 50% of the value of buyer’s shares

of stock; and (v) buyer’s brothers and/or sisters, spouses, and

ancestors and descendants.

For example, wholesale businesses will suff er a con-siderable increase in their tax since now they will be charge with a fee of 0.18% on their monthly gross sales. A similar case occurs with airlines and travel agencies, which should pay 0.32% and 0.90% respectively on gross sales or commissions, where prior to the modifi cation of the tax regime, they usually pay up to US$12,000.00 per year, in the case of airlines, and up to US$3,000.00 per year, in the case of travel agencies. With the reform, the taxes could grow unlimited depending on company’s gross sales, a situation that will surely become a sensitive blow in the fi nances of almost all municipal taxpayer.

By applying this new method, the reform also introduces the obligation of every tax payer to declare and present a monthly gross income form. Any deviation from this obligation will cause that the Municipality will proceed with the calcula-tion of said tax, taking into consideration the last statement filed (previous month). However, the amendment also introduces a fine of one hundred dollars and the shotdown of the establishment

Major Municipalities Change Tax Regimes by Javier Said Acuña and Raúl González Casatti, Rivera Bolivar y Castañedas, Panamá

Recently, through Municipal Agreement No.162, of December 7, 2010, published in the Offi cial Gazette No.26684-B, the Municipal Council of the District of Panama agreed to partially modify the existing mu-nicipal taxation regime (Agreement 162, 2006.). Th is reform makes important amendments to the municipal tax assessment, and introduces new fi gures, such as the withholding agent, a monthly income statement, among others, that line of signifi cant importance to municipal taxpayers.

With this reform, the District of Panama would apply new criteria for determining monthly taxes, which, from now, will be calculated by applying a fi xed percentage over the gross sales of the taxpayer to determine the amount due. Th is method is quite diff erent from the one used right now, which consist in a tariff with staggered reference annual gross income of the taxpayer, and based on these the Municipality establishes the fi xed amount that has to be paid every month.

Th e new method represents a signifi cant and substan-tial raise for the taxpayer since now there will be no “top” on municipal taxes.

23March 31, 2011


until the due declaration (tax form) is submit-ted. The fine will increase by ten percent for each new violation to a maximum of one hundred and fifty dollars.

It is important to measure the extent of these changes, which imposes new obligations on the taxpayer, by carefully analyzing the legal and eco-nomic eff ects that they might have in the economy, considering that the provisions related to the ad-vance payment of monthly income tax, are in eff ect as of January 1 of this year.

So taxpayers will be required to submit, within the fi rst fi fteen days of each month, their monthly advance income tax to the Municipal Treasury, and simultane-ously in the same time period, fi led with the City of Panama their monthly gross income declaration in order to determine his monthly tax payment.

In addition, it is important that municipal au-thorities explains in details about the “withholding agents,” which are defi ned by this Agreement as the natural or legal entities responsible for making the withhold of 1% of total payment in respect of tax to commercial, industrial and profi table activities made on or from the District of Panama. It should be noted that the concept of municipal taxpayer was amended, covering all those natural and legal persons, who carry out profi table activities in or from the district of Panama

This agreement has caused adverse reactions from the business sector, most affected by this new regime, since the tax authorities never consulted (as a normal practice from several previous administrations) the various business associations regarding this major change in the way to calculate and pay municipal taxes. That is why the top leaders of different associations

like the Chamber of Commerce, Industries and Agriculture of Panama, has asked the municipal authorities the repeal of this Agreement, which takes effect from April 1, 2011.

Through Municipal Agreement No.101-40-54 of November 1, 2010 (published in Official Gazette No. 26,682 and already in effect), the City of Colon “reorganized and updated the Tax Regime,” which generally increases taxes. In most cases, the increase is really significant, since it takes into consideration the annual gross income of the taxpayer (which is why taxpayers must annually submit their income tax return to the Municipal Treasury of Colon) in order to determine the payable tax. This increase could materially affect many companies that so far have met their tax obligations, increasing up to ten times or more, the amount in taxes that they had previously paid to the City of Colon.

Th e Municipal Council claims that the tax system was not consistent with commercial reality and actual economic growth in the District of Colon. However, it imposes a signifi cant increase in some industrial and commercial activities, which directly aff ects the fi nances of the companies. A cement fac-tory, for example, would pay US$120,600.00 under this regime, which is considerably more than the actual US$30,000.00 they were currently paying up to 2010.

As noted, local governments are trying to get more funds, but these increases should be made with cau-tion, since to impose dramatic increases in municipal taxes could cause companies to consider shifting the cost to the consumer. Th is kind of action might aff ect not only the economy of the respective district but also aff ect the country since the tax pressure is raising and the cost of living too. ◆

©2011 CCH. All Rights Reserved.24


March 31, 2011

ABOUT US

We are a network of advisors composed of Latin

American, Caribbean, U.S. and Canadian professional

fi rms. The network was formed with the goal of offering

the highest level advisory services in participating coun-

tries, with special emphasis on keeping our clients up

to date on the latest developments.

Our organizational structure allows us to share experi-

ences and professional know-how, always keeping in

mind the perspective and reality of each individual

country. Our experience with laws and tax cases at the

Hemispheric level, along with constant information

sharing regarding the latest tax trends, ensure that our

clients are well informed and prepared to deal with

their tax issues.

OUR MISSION

The Network’s objective is to contribute to the investiga-

tion and analysis of tax policies and strategies, and share

such information in both the public and private spheres.

We will always seek to propose solutions that will im-

prove the position of the business communities in Latin

America, the Caribbean, the United States and Canada.

OUR VISIONWe will continue to establish ourselves on a regional

basis as the premier professional tax and legal organiza-

tion, working in accordance with the highest standards

of quality, integrity, and corporate effi ciency.

ABOUT US

NAME COUNTRY PHONE E-MAIL

Mike Valdés (President) USA/Brazil 1 773 8678629 [email protected]

Luis A. Hernandez (Coordinator) Uruguay 598 96207050 [email protected]

Cristian E. Rosso Alba Argentina 541145908713 [email protected]

Ramiro Guevara Bolivia 5912 2770808 [email protected]

Luis Rogério Farinelli Brasil 5511 30934855 [email protected]

Paul Tadros Carribbean 1 514 6970901 [email protected]

Jorge Espinosa Chile 562 365 1415 [email protected]

Alfredo Lewin Colombia 5713 125577 [email protected]

Adrian Torrealba Costa Rica 506 2565555 [email protected]

Norman Decastro Dominican Republic 809 5415200 [email protected]

Cesar R. Holguin Ecuador 5934 2562908 [email protected]

Roberto Flores El Salvador 503 25055555 rfl [email protected]

Eduardo Mayora Guatemala 502 23662531 [email protected]

Jorge Salles-Berges Mexico 5255 1084 7017 [email protected]

Gloria Alvarado Nicaragua 505 2278 7708 [email protected]

Said Acuña Panama 507 2691127 [email protected]

Cesar Luna-Victoria Peru 511 442 4900 [email protected]

Fernando Goyco-Covas Puerto Rico 1 787 2811802 [email protected]

Alberto Varela Uruguay 598 2623 0000 [email protected]

Peter Byrne USA 1 703 387 3009 [email protected]

Federico Araujo Medina Venezuela 5821 29050293 [email protected]

vol. 13, issue no.3, march 31, 2011 global tax briefing · adoption of the new withholding tax...

Documents