The Change of the Tax Paradigm in Latin America and its Effects Worldwide

January 1, 2023

Argentina and the USA have agreed to sign an agreement for the automatic exchange of information, which would have been impossible a few years ago; however, in tax matters, “anything is possible.” 

1. Background

First, real changes in international taxation were unthinkable; however, in the 21st century, short and medium-term changes began to occur in several countries at the tax level.

In order to achieve greater equity and transparency in transactions, international organizations urged governments to modify their national tax legislation. Likewise, these changes increased with the growing need for tax collection and the dynamic interaction between countries. 

2. Most Relevant Modifications

First, in December 2010, the Financial Investment Companies were eliminated. The entity known as SAFIS (Sociedades Administradoras de Fondos de Inversión – Administrative Societies of Investment Funds) enabled to carry out off-shore activities by paying a single tax amounting to 3%. 

Subsequently, Uruguay and Argentina signed a Tax Agreement to avoid international double taxation along with an exchange of information. Then, the USA created the law of tax compliance of foreign accounts internationally. 

On the other hand, the issuance of financial information reporting is implemented among participating jurisdictions for over 100 member countries of this automatic exchange of information.

One of the most relevant is the implementation of 15 action plans to fight aggressive tax planning (BEPS) by OECD member countries and other non-member countries. In Argentina, it was implemented with the Tax Reform of December 2017.

Jointly, the PILAR I and PILAR II agreements were instituted for the reassignment of multinational companies’ profits and the implementation of a global minimum tax. 

3. Other Modifications in Latin America

In Panama, companies without local transactions must prepare and file their accounting records annually. In that regard, in the case of the British Virgin Islands, these will have records of public access to the personal data of the directors of the companies and the obligation to file accounting records. 


Source: Cronista 01/30/23