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Page 50

Nevertheless, and with the exception of the cases of Chile and Bolivia, which follow the Andean Pact model, the agreements entered into by Argentina follow the guidelines of the UN convention. In broad outline, it can be said that Argentina includes article 14 in all its agreements and considers resident all those persons who perform an activity in the country for more than 183 days, in some cases for a longer period, in others for a shorter period. It also defines as permanent establishment (PE), for all cases, the rendering of services by an enterprise, including consulting services, through its employees or personnel hired by the enterprise to that end. but only where activities of that nature were performed in the country for more than a 6-month period or periods within a 12-month period.

As regards the distinction between the terms “royalties” and “technical assistance”, the agreements entered into by Argentina are very different. As the Income Tax Law clearly defines both terms for the determination of taxes, there are some agreements that include royalties and technical assistance under the same concept and there are other agreements which do not.

Finally, there is a reduced rate of withholding for cross-border services for a group of six countries in which the 183-day limit does not exist.

There are clearly two different conclusions to highlight, one of them regarding the domestic legislation of Argentina and the other regarding its interrelation with other economic communities.

For the first case, it is clear that an update and an adjustment of the provisions for the creation of new types of services are needed to provide a clear definition. Nevertheless, Argentina has a rich and extensive history in the definition of what it considers services, when and how they must be taxed, so perhaps the only difficult issue will be to adapt to new realities.

The second case regarding double taxation agreements is much more complex. This is so not only because of the parties that are involved (different nations with different legislation), but also because of the economic consequences that this generates.

The reporter has attended discussions at the IFA Congress in Rome on the enforceability and the benefit or otherwise that these types of agreement can offer to developing nations. The creation of the UN conventions instead of the OECD convention has not made big changes to the situation and developing nations feel aggrieved in spite of the enforcement of the former convention.


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