Accountancy in Argentina

>> Taxation in Argentina

Corporation tax

Corporation tax applies to all net profits obtained by local tax payers in Argentina and worldwide. For local taxpayers, the rate is 35%. Additionally, it applies to net profits obtained by non-residents in  many cases.

S.A. and S.R.L., amongst other type of societies, are taxed at this rate.

For other payments from a resident to a non-resident person, withholding tax rate varies from 15.05% to 53.846%, depending on two factors:

  1. Class of profit paid (e.g. royalties 21%

or 28%, rents 21%, interests 15.05% or 35%, salaries 24.5%)

  1. If the local company assumes the payment of the profit plus the withholding tax (grossing up).

For example, the tax rates on rent rises to 26.582%.

Tax allowances and deductions: Some special rules are applied, e.g. there are limits on deducting car expenses and their depreciation. For companies, every deduction made in the tax liquidation should have supporting documentation

(an invoice, a receipt, a bill, etc.). Net losses can be offset against the profits up to a maximum of 5 years.

Small companies rate

For small companies, called PYMEs (Pequeñas Y Medianas Empresas), there are to be some benefits applicable in 2018, including the possibility of deferring VAT payments for 90 days and the possibility of offsetting 100% of the tax paid on banking debits and credits.

Income tax

Income tax is applied to individuals. Tax rates vary from 9% to 35% depending on the amount earned in the fiscal year. Some allowances are made for covering basic family expenses. For example, an employee in charge of a spouse and two children pays income tax when net salary is greater than ARS40,000 per month.

As from 2016, dividends are tax free. Capital gains derived from stock sales  are exempt.

VAT: (Value added tax)

The general tax rate is 21%, applied to sales (goods or services) and importations. 27% is applied to public services and 10.5% to some machinery.

The following must be considered:

  • A VAT payer will charge the tax always when the service is rendered or is going to have effect in Argentina, even if A FOREIGN COMPANY is the party invoiced. In this case A FOREIGN COMPANY adds a cost to operations here in Argentina, because ARGENTINA has to deposit the VAT invoiced. ARGENTINA will invoice $ 100 + 21 = 121, the foreign company will pay $121, and only $100 will stay in the group.
  • Services rendered outside of the country but to be consumed in Argentina are subject to VAT. The local importer must calculate and pay the VAT debit and can claim the VAT credit in the following month.
  • Exports (both for goods and services) are tax free, and all the VAT credits contained in related purchases can be deducted from other debits or reimbursed.
  • Imports: When entering the country, the AFIP will charge VAT on goods imported. VAT is also applied on import of services.

Sales tax

Provincial Tax. The usual tax for services is about 4%. In some cases it could be 6%. Payment and tax returns are required monthly or bimonthly. No allowances are admitted.

Tax on minimum presumed income (IGMP)

This tax is calculated as an annual 1% on assets and must be paid when it’s higher than corporate income tax. Only those with assets greater than $ 200,000 are subject to this tax.

Tax on banking debits and credits

Since March 2001 every debit and credit made in current accounts, saving accounts and similar are taxed at a rate of 0,6% that is directly debited in that bank account. 34% of tax on credits may be applied as credit to income tax, corporate income tax or IGMP.

Tax treaties

Argentina has signed tax treaties with many countries, including Italy, Spain, Brazil, Chile and Switzerland. These treaties reduce withholding tax rates in many cases. Argentina has recently been leaving these treaties and starting conversations to produce new types of treaties, to include exchange of information.

Transfer pricing

Since 31/12/98 transfer pricing analysis is required to value operations between related parties.

In many cases, sales of shares are imposed if the company is not listed in the stock exchange and the seller is a resident or a non-resident holding company established in a country that only permits it to operate outside the country. The rate for nonresidents is 17.5% or 35% on net profit of the sale.

Tax return must be filed annually (in the 5th month after the end of the fiscal year). Some payments in advance could be required (equivalent to a monthly 9% of the last year’s tax).

Capital gains

In general, an individual’s capital gains are not subject to income tax, except those derived from sales of shares and participations in companies. In these cases, the rate applied to individuals is 15% on net income.

Taxation of individuals

Individuals resident in Argentina are liable for Income tax at gradual rates on their worldwide income. Non-resident individuals are liable for Argentine income tax only on their Argentine-sourced income, on which tax is levied as a final and lump-sum withholding tax at various effective rates, depending on the type of income

Argentine-sourced dividends are not usually subject to income tax but may be subject to withholding taxes at the moment of payment, under certain circumstances.

Latest version updated 20th December 2017

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