The Double Taxation Relief (Taxes on Income)(Argentina) Order 1997

Made: 22nd July 1997

At the Court at Buckingham Palace, the 22nd day of July 1997 Present, The Queen’s Most Excellent Majesty in Council

Now, therefore, Her Majesty, in exercise of the powers conferred upon Her by section 788 of the said Act, and of all other powers enabling Her in that behalf, is pleased, by and with the advice of Her Privy Council, to order, and it is hereby ordered, as follows:—

1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (Argentina) Order 1997.

2

It is hereby declared—

• (a) that the arrangements specified in the Convention set out in Part I of the Schedule to this Order and in the Protocol amending that Convention set out in Part II of that Schedule have been made with the Government of the Republic of Argentina with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of Argentina;

• (b) that those arrangements include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of Argentina concerning taxes covered by the arrangements including, in particular, provisions about the prevention of fiscal evasion with respect to those taxes; and

• (c) that it is expedient that those arrangements should have effect.

SCHEDULE

PART 1 — CONVENTION BETWEEN THE GOVERNMENT OF THEUNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE REPUBLIC OF ARGENTINAFOR THE AVOIDANCE OF DOUBLE TAXATION AND THEPREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Argentina;

Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital;

Have agreed as follows:

ARTICLE 1 — Personal scope

This Convention shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2 — Taxes covered

ARTICLE 3 — General definitions

ARTICLE 4 — Residence

ARTICLE 5 — Permanent establishment

ARTICLE 6 — Income from immovable property

ARTICLE 7 — Business profits

ARTICLE 8 — Shipping and air transport

ARTICLE 9 — Associated enterprises

ARTICLE 10 — Dividends

ARTICLE 11 — Interest

ARTICLE 12 — Royalties

ARTICLE 13 — Capital gains

ARTICLE 14 — Independent personal services

ARTICLE 15 — Dependent personal services

ARTICLE 16 — Directors' fees

Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company or a similar organ which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17 — Artistes and sportsmen

ARTICLE 18 — Pensions

ARTICLE 19 — Government service

ARTICLE 20 — Students

Payments which a student, apprentice or business trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that first-mentioned State, provided that such payments arise from sources outside that State.

ARTICLE 21 — Other income

ARTICLE 22 — Capital

ARTICLE 23 — Elimination of double taxation

ARTICLE 24 — Limitation of relief

ARTICLE 25 — Non-discrimination

ARTICLE 26 — Mutual agreement procedure

ARTICLE 27 — Exchange of information

ARTICLE 28 — Members of diplomatic or permanent missions and consular posts

Nothing in this Convention shall affect any fiscal privileges accorded to members of diplomatic or permanent missions or consular posts under the general rules of international law or under the provisions of special agreements.

ARTICLE 29 — Territorial extension

At the time of the entry into force of this Convention, or at any time thereafter, the provisions of this Convention may be extended to such territories for whose international relations the Government of the United Kingdom is responsible, as may be agreed between the Contracting States in an Exchange of Notes.

ARTICLE 30 — Entry into force

ARTICLE 31 — Termination

This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of the Convention. In such event, the Convention shall cease to have effect:

• (a) in the United Kingdom:

• (i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April in the calendar year next following that in which the notice is given;

• (ii) in respect of corporation tax, for any financial year beginning on or after 1st April in the calendar year next following that in which the notice is given;

• (b) in Argentina:

• (i) in respect of taxes withheld at source, on income derived on or after 1st January in the calendar year next following the year in which the notice is given;

• (ii) in respect of other taxes on income, and taxes on capital, for taxes chargeable for any tax year beginning on or after 1st January in the calendar year next following the year in which the notice is given.

In witness whereof the undersigned, duly authorised thereto, have signed this Convention.

Done in duplicate at Buenos Aires, this 3rd day of January 1996, in the English and Spanish languages, both texts being equally authoritative.

For the Government of the United Kingdom of Great Britain and Northern Ireland:

Kenneth Clarke

For the Government of the Republic of Argentina:

Guido di Tella

PART II — PROTOCOL AMENDING THE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE REPUBLIC OF ARGENTINA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXESON INCOME AND CAPITAL SIGNED AT BUENOS AIRES ON 3rd JANUARY 1996

At the moment of signing the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital, this day concluded between the United Kingdom and the Republic of Argentina, the undersigned have agreed upon the following provisions which shall be an integral part of the Convention.

• (1) With respect to Article 7, paragraph (1):

• The export of goods or merchandise purchased by an enterprise shall, notwithstanding the provisions of subparagraph (d) of paragraph (4) of Article 5 of the Convention, remain subject to the domestic legislation in force concerning export.

• (2) With respect to Article 7, paragraph (3):

• In the case of Argentina, that paragraph shall not require the allowance of a total deduction for executive and technical assistance expenses when such deduction is limited by the terms of Article 151 of the Income Tax Regulations in force at the date of entry into force of this Convention, or any legislation or regulation which may be imposed thereafter and which is agreed by the competent authorities of the Contracting States to be of a substantially similar character.

• (3) With respect to Article 8:

• The term “profits” includes profits, net profits and revenues derived directly from the operation of ships or aircraft in international traffic, and also includes interest on sums generated from the operation of ships or aircraft in international traffic provided that such interest is incidental to the operation.

• (4) With respect to Article 12:

• (a) the limitations on the taxation at source provided for under paragraph (2) are, in the case of Argentina, subject to the registration requirements provided for in its domestic legislation;

• (b) the limitations on the taxation at source of royalties referred to in subparagraph (b) of paragraph (2) shall apply only if the royalties are derived by the author himself or his descendants;

• (c) in the case of payments for technical assistance the tax payable in accordance with subparagraph (c) of paragraph (2) shall be determined after the deduction of the expenses directly related to the provision of such assistance.

• (5) With respect to Article 23, paragraph (5):

• It is understood that if an extension of the time period mentioned in that paragraph is not agreed upon by the competent authorities, Argentina shall apply the rules provided in Article 21 of the Income Tax Law (Law no. 20628, text approved in 1986 and its modifications to date) in force at the date of signature of this Convention.

• (6) If after the date of signature of this Convention the Republic of Argentina concludes a Double Taxation Convention with a State that is a member country of the Organisation for Economic Co-operation and Development which limits the taxation in the country of source of business profits, insurance or reinsurance premiums, dividends, interest, royalties, payments for technical assistance or capital gains, to a rate that is lower or to a narrower taxable base than that provided for in this Convention, the lower rate (including any exemption) or narrower taxable base shall automatically apply for the purposes of this Convention from the date on which the Convention with that other OECD member country has effect.

• (7) With reference to Article 29:

• It is understood that the competent authorities will consult together concerning the tax system and economic development of the territory in respect of which any proposal for a territorial extension has been made under the terms of that Article and, in the case of Argentina, the extension of the Convention shall be subject to the approval of the Ministry of Economy, Works and Public Services, Secretary of Public Revenue.

Signed

N. H. Nicholls — Clerk of the Privy Council

Explanatory note

(This note is not part of the Order)

The Convention with Argentina and amending Protocol are set out in the Schedule to this Order.

The Convention provides for business profits not arising through a permanent establishment to be taxed, in general, only in the country of the taxpayer’s residence. Profits attributable to a permanent establishment may be taxed in the country in which the permanent establishment is situated. The profits of insurance or reinsurance enterprises may also be taxed in the other country, at a rate not exceeding 2.5 per cent. of the gross amount of the premium, if the insured property is situated in that country or, as appropriate, the insured person resides there (Articles 5 and 7).

Income and gains from immovable property may be taxed in the country in which the property is situated (Articles 6 and 13).

Profits and gains from international shipping and air transport are generally to be taxed only in the residence state of the operator (Articles 8 and 13).

The Convention includes rules for determining taxable profits when a company in one country is related to a company in the other (Article 9).

The rate of tax imposed in the country of source on dividends derived by a resident of the other country shall not, in general, exceed 10 per cent. of the gross amount if the recipient is a company controlling, directly or indirectly, 25 per cent. of the voting power in the company paying the dividends. In other cases, the rate of tax imposed in the country of source shall not exceed 15 per cent. of the gross amount of the dividends (Article 10).

The rate of tax imposed in the country of source on interest derived by a resident of the other country shall not, in general, exceed 12 per cent. of the gross amount of the interest flowing to the other country. Certain categories of interest will be exempt from tax in the source state (Article 11).

The rate of tax imposed in the country of source on royalties flowing to the other country shall not, in general, exceed 3 per cent. of the gross amount of royalties paid for the use of, or the right to use, news, 5 per cent. of the gross amount in respect of copyright of literary or artistic work, 10 per cent. of the gross amount in respect of patents, trade marks, industrial or scientific equipment and the rendering of technical assistance, and 15 per cent. of the gross amount in other cases (Article 12).

Each country may generally tax capital gains in accordance with its domestic law. In the case of gains from share disposals, the rate of tax imposed in the country of source shall not exceed 10 per cent. if the recipient of the gain controls, directly or indirectly, 25 per cent. of the voting power in the company in respect of which the share disposal is made, and 15 per cent. in other cases. Gains arising from the disposal of the assets of a permanent establishment or a fixed base which the taxpayer has in the other country may be taxed in that other country (Article 13).

The earnings of temporary business visitors and some other individuals are, subject to certain conditions, to be taxed only in the country of the taxpayer’s residence (Articles 14 and 15). Fees received by a resident of one country in his capacity as a director of a company resident in the other country may be taxed in that other country (Article 16). Income derived from the activities of artistes and sportsmen may be taxed in the country in which those activities are performed (Article 17).

Occupational pensions and annuities are to be taxed only in the recipient’s country of residence (Article 18) while government service remuneration is normally to be taxed only by the paying Government (Article 19). There are separate provisions for diplomatic or consular officials (Article 28). Certain payments made to visiting students and business apprentices are generally to be exempt from tax in the country visited (Article 20).

Other income not specified in the Convention will generally be taxed only by the country of which the beneficial owner is a resident (Article 21).

The Capital Article (Article 22) reflects the existence of a capital tax in Argentina and provides that capital represented by immovable property may be taxed in the country in which the property is situated. Capital represented by movable property is normally to be taxed only in the country of residence.

Where income continues to be taxable in both countries, credit will be given in the taxpayer’s country of residence for tax imposed by the other country. The credit to be given in the United Kingdom for tax imposed in Argentina includes credit for tax spared under certain provisions of Argentinian law. In the case of dividends, the United Kingdom will give credit for the underlying tax paid in Argentina where the shareholder is a United Kingdom company which controls at least 10 per cent. of the voting power in the company paying the dividends (Article 23).

There are provisions whereby the United Kingdom ensures that it retains its right to tax a United Kingdom resident member of an Argentine resident partnership (Article 4), which limit the relief available in certain circumstances (Article 24), and which allow the Convention to be extended, by bilateral agreement, to territories for whose international relations the Government of the United Kingdom is responsible (Article 29).

There are also provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country (Article 25), for consultation to resolve difficulties in the application or interpretation of the Convention (Article 26), and for exchanges of information between the taxation authorities of the two countries (Article 27).

An amending Protocol, to enter into force concurrently with the Convention, clarifies the interaction between certain of its provisions and Argentina’s domestic law. It amends Article 12 by stipulating that only the author himself or his descendants may benefit from the 5 per cent. limitation on withholding taxes on royalties paid in respect of copyright of literary or artistic work; and by allowing for the deduction of relevant expenses from the quantum of technical assistance royalties. The Protocol also stipulates that if Argentina subsequently agrees in a Convention with any member of the Organisation for Economic Co-operation and Development, other than the United Kingdom, to apply lower rates of taxes to business profits, insurance or reinsurance premiums, dividends, interest, royalties, payments for technical assistance or capital gains, or to levy those taxes on a narrower taxable base, the lower rates or narrower taxable base shall apply to this Convention.

The Convention will enter into force thirty days after the date on which the instruments of ratification are exchanged. It will take effect in the United Kingdom in respect of corporation tax from 1st April in the calendar year next following that in which the instruments of ratification are exchanged; and from 6th April that year for income tax and capital gains tax.

Footnotes

[^f00001]: 1988 c. 1; section 788 is extended by section 277 of the Taxation of Chargeable Gains Act 1992 (c. 12).

[^f00002]: The instruments of ratification were exchanged on 2nd July 1997.