Taxes in Argentine affecting overseas shipping

Income Tax on Freights:

Argentine goverment considers that all freights earned on export cargoes from Argentina are presumed to have a profit of 10% and therefore this 10% profit is levied with a 35 per cent income tax. That is to say that the company who is the legal beneficiary of the freight (i.e. Ship Owners or time charterers or other) is responsible for the payment of 3.5% of the total gross freight earned.

In case of payments done from Argentina, the remitting bank will automatically effect the deduction of the tax prior remittance. In case of payments done abroad, the responsible party in front of Tax Authorities will be the nominated Ship Agent acting during the call of the vessel in that particular time.

Exemption agreements

The countries constituted in the following countries are exempted from paying the Argentine income tax on freight:

• Armenia
• Azerbaiyán
• Belarús
• Estonia
• Rusia
• Georgia
• Kazajstán
• Kirguistán
• Letonia
• Lituania
• Moldavia
• Tayikistán
• Turkmenistán
• Ucrania
• Uzbekistán

Former Yugoslavia (3)

• Bosnia/Hercegovina
• Croacia
• Eslovenia
• República Federativa de Yugoslavia
• Serbia y Montenegro

1) This treaty applies only to residents of China. This treaty does not apply to companies constituted in Hong Kong, SAR or the islands of Kinmen, Matsu, Penghu and Taiwan.

(2) The treaty applies ti the United Kingdom and Northern Island and does not apply to the Island of Man, the Channel Islands nor other British colonies, possessions or territories.

(3) The list of these countries has been provided by the Argentine Foreign Officer through their letter Ditra 92/95, dated April 11, 1995.

Comments:

Companies which apply for exemption from payment of Argentine freight tax should bear in mind the following:

By resolution 2066/78 of the Argentine Federal Tax Administration (AFTA) companies claiming exemption from double taxation must produce the " Argentine Tax Affidavit" in the country with which the agreement is signed, certifying that the direct beneficiary of the freights or passages is constituted in that country. The ship´s nationality and port of registry should be included in that affidavit.

All documents must be visaed by the Argentine Consul or Apostille.

Agents or representatives must present to AFTA (at regular monthly intervals) details concerning beneficiaries of freights and passages, including name, nationality, port of registry, official number, sailing date, port of departure and destination of the vessel (s)

In cases which do not qualify for tax exemption, agents are of course responsible for the collection and payment of the tax.

The above "Argentine Tax Affidavit" must be substituted to advantage by producing a certified statement testifying to the existence of the beneficiary of freight and of their respective ship (s). The statement is known as affidavit and its text is roughly along these lines:

On this... day of the month of ..... of the year..... before me Notary Public resident in...... (City & Country)...... appeared Mr............... domiciled at.................................. company director on behalf of................... (Name of the Shipowner or Disponent Ownership Company) domiciled at.................. who in the aforesaid capacity states: That the.............. (Name of the Company).............is the......... (Owner or Disponent Owner)............ of the following ship (s) assigned by it to the maritime traffic with the Argentine Republic:

That the aforesaid Company is the direct and final beneficiary of the profits arising out of the freights and/ or passages which are received for the vessel (s) mentioned above.

That (he) makes this declaration to be presented to the "Administración Federal de Ingresos Públicos" of the Argentine Republic (Internal Revenue Services) in compliance with the requirements of General Resolution 2066 of August 1 st, 1978 and Circular 1070 of October 12 th, 1978, through their General Agents in the Argentine Republic Messrs...................... domiciled at....... (street, number, postal code, city and country)

The acting Notary Public certifies that the information hereby given is authentic, which I attest, and that the Company............................... is legally constituted in accordance with the laws in force in............................... and is registered in the Commercial Register of the City of........................... under number.......... having at the above mentioned address its Legal and Central Administration and that Mr.............. is a President/Director/Attorney sufficiently empowered to represent the said company and to make this declaration¨.

Signature and seal of the Notary Public

The above Notary´s signature must be authenticated by a local authority and legalized by the Argentine Consulate. It is advisable that, whenever possible, said document is submitted together with a certification by the tax authority acting at the place of issue.

In the case of those countries which have signed the Apostille Treaty according to the "The Hague Convention of October 5 th, 1961 the document need not be legalized by the Argentine Consulate.

VAT

No Value Added Tax is levied against vessels´ port disbursements

Tax on debits and credits in financial transactions:

Law Nº 25.413, in force as from March 26, 2001, established a charge of 6 per mil (0.60%) applicable on every credit on bank accounts.