Reduction of the Value Added Tax Rate

Decree 2312/2002, published in the Official Gazette on November 15, set forth a reduction of two points of the Value Added Tax (“VAT”) rate. Consequently, by virtue of the Decree the applicable rate of 21% was reduced to 19%, while the differential rate of 10.50% was reduced to 9.50%.

Pursuant to Decree 2312/2002, the afore mentioned reduction of the VAT rates shall be applicable with respect to the taxable events occurred between November 18, 2002, and January 17, 2003, both dates inclusive.

This amendment of the VAT rates was decided by the Federal Executive Branch, through the use of its specific attributions foreseen in the same VAT Law, in order to encourage consumption as an alternative to ease the current economical situation of Argentina.