The current state of M&A in Latin America and beyond (2025)
Sebastián Correa
Serrano Martínez CMA, Colombia
scorrea@serranomartinezcma.com
Report on a session at the 17th IBA/ABA US and Latin America Tax Practice Trends Conference in Miami
Thursday 19 June 2025
Session Co-Chairs
Devon Bodoh Weil, Gotshal & Manges, Miami
Ricardo Bolan Lefosse, São Paulo
Speakers
Amie Colwell Breslow Jones Day, Washington, DC
Manuel Benites Pérez Alati, Grondona, Benites & Arntsen, Buenos Aires
Fernando Camarena Foley & Lardner Mexico, Mexico City
Renato Coelho Stocche Forbes, São Paulo
Carolina Rozo Philippi Prietocarrizosa Ferrero DU & Uría, Bogotá
Susanne Schreiber Bär & Karrer, Zurich
Introduction
The panel provided a comparative analysis of legislative changes, practical challenges and emerging trends in Argentina, Brazil, Colombia, Mexico, Switzerland and the United States.
Key subjects included indirect transfer rules, treaty protections, anti-abuse measures, tax incentives and the impact of international tax reforms such as Pillar Two. The session offered practical insights for cross-border investors, multinational enterprises and practitioners navigating an increasingly complex tax environment.
Panel discussion
Indirect taxation of share transfers in Latin America
The panel commenced with a detailed exploration of indirect taxation regimes, focusing on the taxation of indirect transfers of shares -- a subject of increasing relevance as Latin American jurisdictions align with global standards.
Argentina
Manuel Benites described Argentina’s indirect capital gains tax regime, in force since 2018. The tax applies to non-resident sellers of shares in non-resident entities if three cumulative conditions are met:
- the participation sold was acquired after 1 January 2018;
- at least 30 per cent of the value of the shares derives from Argentine assets; and
- the shares sold represent at least 10 per cent of the equity of the foreign entity, measured over a 12–18 month period.
The tax is levied only on the proportion of value attributable to Argentine assets. The applicable rate is 15 per cent for jurisdictions without a double tax agreement (DTA), rising to 35 per cent for non-cooperative jurisdictions, with lower or no tax for DTA countries. Sellers may choose to calculate the tax based on the real gain (sale price minus cost and expenses in Argentina) or a presumed gain (90 per cent of the sale price).
If the buyer is Argentine, they act as withholding agent, leading to complex negotiations regarding acquisition history and asset composition. Treaty protection remains contentious, with newer treaties contemplating such taxation; older ones generally do not, except for real estate entities. The lack of clear administrative guidance complicates compliance and risk assessment.
Brazil
Renato Coelho explained that Brazil lacks explicit indirect transfer rules, but tax authorities have increasingly sought to tax capital gains on indirect transfers by disregarding offshore holding companies in certain cases. The approach is highly fact-specific, focusing on the substance of the transaction and the relevance of Brazilian assets within the group.
Most of Brazil’s treaties grant taxing rights over capital gains from the sale of Brazilian shares, except for the treaty with Japan. The tax liability falls on the purchaser or their local proxy, and there is no step-up in the tax basis for the Brazilian company, which can result in significant penalties if the authorities prevail. The panel noted that this creates significant uncertainty for foreign investors, particularly those using non-resident vehicles with limited substance.
Colombia
Carolina Rozo emphasised the interplay between domestic law and treaty protection. Colombia’s rules consider the fiscal basis and tax attributes of the direct investor, raising questions about the applicability of treaties when intermediary holding companies are involved. The ‘sandwich’ structure – where a Spanish company owns a US company that, in turn, owns a Colombian subsidiary – was discussed.
While arguments exist for applying the Spain–Colombia treaty, tax authorities may challenge such structures, especially if substance is lacking. The panel also addressed the treatment of capital restructurings and investments, noting the grey areas in distinguishing between sales and mere capital infusions.
Mexico
Fernando Camarena noted that Mexico generally does not tax indirect transfers, except in cases involving real estate assets, where the OECD standard is followed. The Mexican rules focus on the accounting value of real estate, which can differ from fair market value, leading to interpretive challenges. Treaty relief may be available, depending on the applicable standard.
Camarena also highlighted the increasing scrutiny of business purpose and anti-abuse rules in Mexico, with tax authorities actively challenging transactions lacking substantive economic rationale. A case study illustrated the authorities’ willingness to recharacterise transactions as shams if they believe the structure was designed to minimise tax, regardless of the taxes actually paid under existing rules.
United States
Amie Colwell Breslow addressed the US position on the indirect taxation of share transfers by non-residents. She noted that such transactions are generally not subject to US tax unless they involve the transfer of shares in a US corporation. The analysis emphasised the importance of distinguishing between direct and indirect ownership, and how US domestic rules interact with international treaty obligations. The treatment of dividends, interest and other passive income paid to non-US persons was also discussed, with reference to the fixed, determinable, annual or periodical income (FDAP) regime and the limits of treaty relief with certain Latin American jurisdictions.
Switzerland
Susanne Schreiber presented the Swiss approach to indirect share transfers, highlighting that Switzerland does not typically impose capital gains tax on non-residents unless a permanent establishment or specific domestic nexus is involved. She discussed the importance of substance and economic activity when assessing the tax treatment of holding structures used in cross-border investments. The Swiss position reflects a principle-based approach, which differs in scope and application from many Latin American jurisdictions, and underscores the need for careful analysis in multijurisdictional transactions.
Current M&A trends and legislative developments across Latin America
Argentina
Benites reported a notable uptick in M&A activity in Argentina in 2024, driven by macroeconomic improvements, reduced inflation and the enactment of the ‘basis law’, which introduced the Incentive Regime for Large Investments (known as RIGI).
RIGI offers significant tax incentives, including a reduced corporate tax rate (25 per cent), lower dividend withholding (3.5 per cent after seven years), accelerated depreciation, unlimited tax loss carry-forwards and full credit for bank taxes. Customs and foreign exchange incentives include exemptions from import and export duties, free availability of foreign currency and a progressive exemption from repatriation requirements. The regime is particularly attractive for sectors such as mining (notably lithium), technology, oil and gas, consumer retail and financial services. To qualify, acquisitions must be followed by a merger within 180 days, and only a portion of the investment can be allocated to share acquisitions.
Brazil
Coelho observed that recent M&A activity in Brazil has been dominated by domestic consolidations, particularly among large players in sectors such as retail, healthcare and energy. There has been a relative decline in private equity, venture capital and foreign investment transactions, with most deals involving the consolidation of Brazilian companies rather than greenfield investments. The Brazilian tax authorities have increased their scrutiny of M&A transactions, particularly with respect to substance, principal purpose and transfer pricing.
Colombia
Rozo highlighted two recent cases that have shaped the Colombian approach to M&A taxation. The first involved the denial of goodwill amortisation following a share acquisition, prompting legislative changes. The second addressed the deductibility of interest on acquisition debt, with the Supreme Court ultimately allowing the deduction where the taxpayer demonstrated necessity and business purpose. The panel noted an increasing trend of tax authorities challenging transfer pricing and related-party transactions, often applying strict standards and invoking anti-abuse provisions.
Mexico
Camarena reported a less optimistic outlook for M&A in Mexico, citing economic uncertainty and the impact of US tariffs. The Mexican tax authorities have intensified their application of general anti-avoidance rules (GAAR) and business purpose requirements, often challenging transactions even where formal compliance is observed.
Switzerland
Schreiber commented on Switzerland’s evolving role in the international M&A landscape. She noted the country’s efforts to implement Pillar Two rules while maintaining competitiveness through compliant preferential regimes. Schreiber emphasised that investors using Swiss holding structures must now contend with stricter substance requirements and anti-abuse rules, which can impact transaction structuring. The Swiss experience highlights broader trends in global M&A, including increased transparency, multilateral cooperation and alignment with OECD standards – all of which have implications for deals involving Latin American jurisdictions.
Conclusion and final remarks
The panel concluded that the landscape for international tax and M&A in Latin America is rapidly evolving, shaped by legislative reforms, increased scrutiny from tax authorities, and the global push for greater tax transparency and minimum standards.
While opportunities abound – particularly in Argentina and Brazil – investors must navigate complex and sometimes ambiguous rules on indirect transfers, treaty protection and anti-abuse provisions. The rise of tax insurance, the impact of Pillar Two and the potential for retaliatory measures by the US add further layers of complexity.
The panellists emphasised the importance of proactive planning, robust due diligence and close monitoring of legislative developments to successfully manage tax risks in cross-border transactions.