A new tax on credits and debits on checking accounts was created by Law 25,413, which was enacted on March 24 2001. This law is regulated by the government and the Automated Financial Improvement Programme (General Revenue Service).

The tax is levied upon debits and credits in checking accounts, and transactions that "due to their special nature and characteristics" are similar or could be used instead of a checking account (eg, payments on behalf of third parties, procedures for the recovery of values or documents, drafts and transfers of funds made by any means) when these transactions are performed by entities regulated by the Financial Entities Law. Transfers and deliveries of funds are also subject to this tax, when these transactions are made through organized systems of payment substituting the use of checking accounts.

The general rate of the tax is 0.4%, and up to 37.5% of the tax paid may be credited against the income tax, the presumed minimum income tax or the value added tax liability. A rate of 0.8% applies to transactions considered a substitution of the use of a checking account.

Commercial banks must act as collection agents. This new tax will remain in force until December 31 2002.

Along with Law 25,413 the Central Bank issued a regulation pursuant to which legal entities may not hold saving accounts.

Finally, pursuant to Section 10 of Law 25,413 the Central Bank will not be able to impose sanctions - such as prohibiting the use of checking accounts - on entities and individuals that issue cheques without funds deposited in the relevant checking accounts. From the passing of Law 25,413, each bank may regulate the terms and conditions of a checking account individually with the customers.

For further information on this topic please contact Gabriel Matarasso at Marval, O'Farrell & Mairal by telephone (+54 11 4310 0100) by fax (+54 11 4310 0200) or by e-mail ([email protected]). The Marval, O'Farrell & Mairal web site can be accessed at www.marval.com.ar.

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