Circular LISOL 1 - 435: Tax on Presumptive Minimum Profit Treatment for Financial Entity Minimum Capital and Immobilized Assets

BANCO CENTRAL DE LA REPÚBLICA ARGENTINA COMUNICACIÓN “A“ 4296 11/02/2005 TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 435
Tax on Presumptive Minimum Profit.
Treatment for the purposes of “Minimum Capital for Financial Entities” and “Report on Immobilized Assets and Other Concepts”. ______ We address you to inform you that this Institution has adopted the following resolution:

“1. Incorporate into point 1.1.2. of Section 1. of the regulations on “Report on Immobilized Assets and Other Concepts” the following:
“1.1.2....Balances in favor from the application of the tax on presumptive minimum profit.”

2. Incorporate as the last paragraph in point 7.2.1. of Section 7. of the regulations on “Minimum Capital of Financial Entities” the following:
   “The amount of the balance in favor from the application of the tax on presumptive minimum profit - net of provisions for devaluation risk - that exceeds 10% of the sum of the items in points 7.2.1.1. to 7.2.1.6. of the relevant period or 10% of the computable net worth corresponding to the previous month, whichever is lower, shall be deducted.”

We send you attached the sheets that, in replacement of those previously provided, should be incorporated into the consolidated texts of the regulations on “Report on Immobilized Assets and Other Concepts” and “Minimum Capital of Financial Entities”.

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA Ana M. Lemmi Submanager of Norms Issuance Alfredo A. Besio Manager of Norms Issuance

ANEXO

REPORT ON IMMobilized ASSETS
B.C.R.A. AND OTHER CONCEPTS
Section 1. Immobilized Assets.
Version: 4th. COMMUNICATION “A“ 4296
Validity:
11/02/2005

1.1. Concepts included.
1.1.1. Shares of domestic companies.
1.1.1.1. Without quotation.
1.1.1.2. With quotation when the holding exceeds 2.5% of the capital and/or votes of the company or when, without exceeding said margin, the eventual liquidation of the holding may significantly affect the quotation taking into account the daily amount of transactions carried out.
1.1.2. Various credits.
1.1.2.1. Facilities granted to enable the sale on installment of the entity's goods, regardless of the nature of the asset, when any of the following conditions are verified:
i) the pertinent analyses and evaluations on the acquirer's financial situation have not been carried out nor have the credit regulations been observed. ii) the borrower is related - in the terms of Annex I to Communication “A” 2140 or point 4.2. of Chapter I of Circular OPRAC-1, taking into account what is provided in the third paragraph of point 2. of the resolution disseminated by said communication - to the holder of the debt that originated the transfer in payment or to the financial entity creditor. iii) that the assistance is granted under conditions that are more favorable than those currently in the market for financings of the same nature (term, interest rate, amortization system, grace periods, guarantees, etc.).
1.1.2.2. Balance in favor of value-added tax and advances of other taxes.
1.1.2.3. Balances in favor from the application of the tax on presumptive minimum profit.
1.1.2.4. Assets affected as collateral, including, among others, those linked to the fulfillment of obligations related to acting as a stock market or over-the-counter market agent.

REPORT ON IMMobilized ASSETS
B.C.R.A. AND OTHER CONCEPTS
Section 1. Immobilized Assets.
Version: 7th. COMMUNICATION “A“ 4296
Validity:
11/02/2005

1.1.2.5. Other various credits.
1.1.3. Goods for own use.
1.1.4. Various goods.
1.1.5. Organization and development expenses not deductible for the determination of computable net worth.
1.1.6. Goodwill (registrations incorporated prior to 30.5.97).
1.2. Exclusions.
1.2.1. Assets affected as collateral.
For the following operations, as long as the pertinent provisions are observed:
i) Passive securities and foreign currency swaps. ii) Passive credit swaps. iii) Futures, options, and other derivative products. iv) Foreign credit lines for the settlement of operations carried out through Euroclear and Cedel.

B.C.R.A.
ORIGIN OF THE PROVISIONS INCLUDED
IN THE CONSOLIDATED TEXT OF THE REGULATIONS ON “REPORT ON IMMobilized ASSETS AND OTHER CONCEPTS” CONSOLIDATED TEXT ORIGIN REGULATION
Section Point Paragraph Com. Cap./ Point Paragraph
Observations
1.1.1. “A” 2736 unique 1.6. According to Com. “A” 4093 (penultimate
paragraph).
1.1.2. “A” 2736 unique 1.5. According to Com. “A” 3131, “A” 4093
(penultimate paragraph) and “A” 4296
(point 1.).
1.1.3. to
1.1.6.
“A” 2736 unique 1.1. to
1.4.

1. According to Com. “A” 2753.
   1.2.1. “A” 2753 1. Includes interpretative clarification and
   modification by Com. “A” 2832,
   “A” 3558 and “A” 4093 (penultimate paragraph).
   2.1. “A” 2736 1. 1st According to Com.”A” 4093 (point 6.).

2.2. “A” 4093 4.
3.1.1. “A” 2736 unique 1. last According to Com. “A” 2966 and “A” 4093
(penultimate paragraph).
3.1.2.1. “A” 2736 unique 3. According to Com.”A” 4093 (penultimate
paragraph).
3.1.2.2 “A” 414
LISOL-1
VII 5.2.2.
3.1.2.3. “A” 2736 unique 3.
3.2. “A” 2736 1. 3rd According to Com. “A” 2966 (includes
interpretative clarification) and “A” 4093 (penultimate paragraph). 3.
3.3. “A” 2736 1. 2nd
4. 4.1. “A” 2736 1. 1st According to Com. “A” 4093 (point 1.).
5.1.1. “A” 3161 1.
5.1.2. “A” 3161 1. S/ Com. “A” 3171 (point 2.).
5.2. “A” 3161 1.
5.2.1. “A” 3161 1.
5.2.2. “A” 3161 1.
5.2.2.1. “A” 3161 1.
5.2.2.2. “A” 3161 1.
5.2.3. “A” 3161 1. According to Com. “A” 3171 (point 3.).
5.3.1.1. “A” 2241
CREFI-2
I 3.2.3.
5.3.1.2. “A” 2241
CREFI-2
II 1.2.
5.3.1.3. “A” 2241
CREFI-2
III 1.1.
5.3.1.4. “A” 2241
CREFI-2
IV 1.3.
5.3.2. “A” 3161 1. S/Com. “A” 3171 (point 4.).
5.4. “A” 3161 1.
5.
5.5. “A” 414
LISOL - 1
V 4. Modified by Com. “A” 817 and according to Com. “A” 4093 (penultimate paragraph).

MINIMUM CAPITAL OF FINANCIAL ENTITIES B.C.R.A.
Section 7. Computable net worth.
Version: 5th. COMMUNICATION “A“ 4296
Validity:
11/02/2005

7.1. Determination.
The computable net worth of financial entities, for the purposes of the regulatory norms of the prescriptions of articles 30 and 32 of the Financial Entities Law and other provisions of the Central Bank of the Argentine Republic that refer to this concept, will arise from the following expression:
RPC = PNb + PNc - Cd where
RPC: computable net worth.
PNb: basic net worth.
PNc: complementary net worth, not exceeding 100% of PNb. Cd: concepts that must be deducted.

7.2. Computable concepts.
7.2.1. Basic net worth.
It includes the following items of net worth:
7.2.1.1. Social capital.
7.2.1.2. Non-capitalized contributions.
7.2.1.3. Adjustments to equity.
7.2.1.4. Profit reserves.
7.2.1.5. Unassigned results. The positive result of the last closed fiscal year will be computed once the auditor's report is available.
Additionally, in cases of consolidation, it includes:
7.2.1.6. Third-party participation.
Balances in favor from the application of the tax on presumptive minimum profit - net of provisions for devaluation risk - that exceed 10% of the amount resulting from the sum of the concepts contained in points 7.2.1.1. to 7.2.1.6. or 10% of the computable net worth corresponding to the previous month, whichever is lower, shall be deducted.

7.2.2. Complementary net worth.
It includes the positive or negative result of the algebraic sum of the following concepts.
7.2.2.1. Contractually subordinated obligations to other liabilities, issued under the conditions established in point 7.2.3. (+).

MINIMUM CAPITAL OF FINANCIAL ENTITIES CONSOLIDATED TEXT ORIGIN REGULATION
Section Point Paragraph Com.
Cap./
Annex
Point Paragraph
Observations
5.
5.6. “A” 2922 I Modified by Com. “B” 6523 and
“A” 4172. Point 5.6.4.5. modif. by Com. “A” 3274, “A” 3959 and “A” 4180.
6.1. and
6.2.
“A” 2461 unique I. and II. According to Com. “A” 4172.
6.3. and
6.4.
“A” 2461 unique I. and II. According to Com. “A” 3959 and “A” 4172.
6.5. “A” 2461 unique I. and II. Modified by Com. “A”
2736, 2768, 2948, 3959 and 4172.
Point 6.5.2. includes interpretative clarification.
6.6. “A” 2461 unique III. According to Com. “A” 3161 and “A” 4172.
6.7. “A” 2461 unique VI. According to Com. “A” 4172.
6.
6.8. “A” 2461 unique VII. According to Com. “A” 4172.
7.1. “A” 414
LISOL-1
VI 3.1. 1st According to Com. “A” 2279, (mod. by Com. “A” 2453, 2793, 2914, 3039 and 4172).
7.2.1. “A” 414
LISOL-1
VI 3.1.1. According to Com. “A” 2223 (modified by Com. “A” 2227 and “A” 4296, point 2.).
7.2.2. “A” 414
LISOL-1
VI 3.1.2. According to Com. “A” 2223. Modified by Com. “A” 2768, 2948 and 4172.
7.2.3. 1st “A” 414
LISOL-1
VI 3.1.2.2. According to Com. “A” 2264 and 4172.
Incorporates interpretative clarification.
7.2.3.1. to
7.2.3.4.
“A” 414
LISOL-1
VI 3.1.2.2. According to Com. “A” 2264 and 4172. In the second paragraph of point
7.2.3.3. incorporates interpretative clarification.
7.2.3.5. “A” 2264 2. According to Com. “A” 4172.
7.2.3.6. “A” 414
LISOL-1
VI 3.1.2.2. According to Com. “A” 2264 and 4172.
7.2.4.1. “A” 2287 3.1. and
3.3.
According to Com. “A” 2890 and 4172.
“A” 2287 3. last According to Com. “A” 4172.
1st and last
7.2.4.2. 1st “A” 2497 1. According to Com. “A” 3621 and 4172.
last “A” 2263 2. According to Com. “A” 4172.
1st and last
7.2.4.3. “A” 2287 3.2. According to Com. “A” 4172.
2nd “A” 2474 Procedural norms on minimum capital requirement and integration (point 3.2.7). Modified by Com.“A” 4172. 7.
7.2.4.4. “A” 2264 1. According to Com. “A” 4172.