| Argentina Income Tax Rates In Argentina, 2 types of taxes are currently levied on individuals:
1) Personal Income Tax
2) Personal Assets Tax (Wealth Tax)
1) Argentina Income Tax RatesArgentina residents are liable to a progressive tax on their worldwide income ranging between 9% - 35%. There are 7 income tax scales:
Taxable Income (ARS) / Tax Rate %
ARS 0 to 10,000 9%
ARS 10,001 to 20,000 14%
ARS 20,001 to 30,000 19%
ARS 30,001 to 60,000 23%
ARS 60,001 to 90,000 27%
ARS 90,001 to 120,000 31%
ARS 120,001 and above 35%
Income tax is levied on income earned in Argentina and abroad by individuals residing in Argentina.
Argentina Income Tax is payable on an annual basis with five advanced payments (every two months). Any expenses incurred in generating such income may be deducted from gross income. The law establishes fixed deductions: non taxable minimum, special tax free amount, dependant allowance, etc.
Capital gains not related to income-generating activity are not subject to tax. In the case of the disposal of real property not assigned to such activity, a 1.5% real estate sales tax is charged on the selling value of the property, regardless of whether a loss or a profit is made.
Under the Income Tax Act, some exemptions are provided for the financial and capital markets, whereby interest on time deposits, government securities, and income from stocks and bonds that are quoted on the Stock Exchange are not subject to tax. Similarly, the sale of stocks (issued by an Argentine company) is not levied with income tax provided that the activity of buying and selling stocks is not performed on a regular (trading) basis.
Employees are subject to withholding tax at source, for which the employer is responsible (withholding agent).
2) Argentina Personal Assets Tax (Wealth Tax)Argentina Personal Assets Tax (Wealth Tax) is levied on:
- all assets located in Argentina or in foreign countries that belong to individuals resident in Argentina
- all assets located in Argentina that belong to individuals resident in foreign countries
- shares issued by Argentine companies. In this case, the company pays the tax on behalf of the shareholders.
Individuals residing in Argentina
This tax is levied on all assets located in Argentina and in foreign countries. Similar tax paid arising overseas in respect of assets located in foreign countries is creditable against personal assets tax.
The only deduction allowed is the amount of liabilities arising from the purchase or construction of the taxpayer's home.
Investments in shares issued by an Argentine company are not to be included in the taxable base because the company pays this tax on behalf of the shareholders (a situation that does not mean shares are exempted).
The tax is assessed on the value of property that exceeds the tax free amount of $305,000. If the taxable base is higher than $ 305,000, the tax is assessed on the total and it is calculated on a progressive tax-rate-scale basis. The applicable rate ranges from 0.5% to 1.25% on the taxable base.
Individuals and companies residing in a foreign country
Personal Assets Tax (Wealth Tax) tax is also charged on assets located in Argentina and owned by individual foreign residents at a 1.25% rate. Neither deductions nor taxable minimum are allowed.
In the case of certain assets (i.e. securities, non-exploited real estate property, etc) located in Argentina and owned by foreign companies, these are deemed to belong to individuals and are levied with personal assets tax at a 2.50% rate.
Shareholders of an Argentine company who reside in foreign countries are liable to personal assets tax. The tax liability is not assessed directly but is paid by the company on behalf of its shareholders (see the next paragraph).
Shares issued by an Argentine Company
Shares whose holders are foreign resident companies are deemed to belong to foreign resident individuals and the tax is levied on those shares. The taxable base is the Argentine company's equity value assessed in the company's last financial statements. The tax rate is 0.5%.
In all such cases, the tax is assessed and paid by the Argentine company on behalf of the shareholders. The tax paid is not deductible for income tax purposes because the company is allowed to claim the tax paid to the shareholders.
A foreign company's branch (a permanent establishment in Argentina) will be levied on personal assets tax in respect of the capital assigned to the branch.
For foreign companies' shareholders of an Argentine company who reside in Treaty Countries (for the avoidance of double taxation), it is important to analyse each Tax Treaty to understand whether shares are levied in Argentina or in the country where the holder has their fiscal residence.
Argentina Corporate TaxArgentina corporate income tax rate is 35%.
The tax rate for corporations (Sociedades Anónimas, Sociedad de Responsabilidad Limitada - Limited Liability Corporation - en Comandita) and branches of foreign companies domiciled in Argentina is 35%. For other partnerships, the tax is charged to each partner according to a progressive tax rate scale ranging from 9% to 35% depending on the amount of the taxable income.
Companies in Argentina are subject to income tax on all their income, whether sourced in Argentina or in a foreign country. Non-resident companies are subject to tax on Argentine source income. Income from export of goods situated in Argentina is deemed to be fully taxable and, for other specific international activities (e.g. new agencies, insurance, commercial use of films produced abroad, international transport etc), the tax law establishes a certain percentage as presumed income.
Foreign recipients not qualifying as a permanent establishment in Argentina are subject to withholding tax at source. The rate is 35% on the applicable presumptive net income percent, depending on the type of payment made (i.e. interest, fees, royalties, rentals, etc).
For companies organised or incorporated in Argentina, any income tax (or similar tax) paid abroad on a foreign source income is creditable against Argentine income tax, up to a limit.
Company income is taxed on an accrued basis during the company's business year. The tax is assessed annually within five months after fiscal year end. Advanced payments must be paid monthly on the basis of the tax amount paid the previous year. Moreover, the AFIP (Tax Authority) has enforced several withholding tax regulations that involve almost all kind of activities. The income tax withheld during the fiscal year is creditable against the income tax assessed, as well as the advanced payments.
The balance can be paid at due date or filing an instalment plan (up to 12 instalments) accruing interest at a monthly 2% rate.
Capital gains tax: There is no separate tax levied on capital gains for companies organised in the country or for branches as they fall under the scope of income tax. For foreign corporations, capital gains are also included under withholding at source income tax regime at the time payment is made.
For foreign resident companies that own shares issued by an Argentina company, gains derived from the alienation of those shares are not levied on income tax, provided that the owner's shares (issued by the foreign resident company) are registered (not issued to the bearer). The same exception is applicable on the alienation of shares and bonds that are quoted on the Stock Exchange.
On the other hand, for foreign companies residing in tax havens (offshore companies) that are shareholders of an Argentine company, gains derived from the alienation of those Argentine shares are levied with income tax. The applicable withholding tax rate is 17.50%.
Foreign tax relief: Any overseas income taxes paid on foreign-sourced income may be creditable against Argentina income tax up to the limit of the increase in the tax liability resulting from aggregating the foreign-sourced income.
Minimum presumptive income tax (MPIT): Minimum presumptive income tax (MPIT) is levied on all assets located in Argentina or in foreign countries owned by companies domiciled in Argentina or branches of foreign companies located in Argentina.
The Tax Act sets out how to value the assets to which, in general, the current market value must be given. Some assets are not levied, e.g. shares of other companies domiciled in Argentina, dividends earned, investment in constructions (for two years), and new personal property purchases (for two years). Companies having less than $200,000 of assets are not levied. Field Real Estate property is levied allowing a special deduction of up to $200,000.
The tax rate is 1%. Financial institutions and insurance companies, subject to the control of state entities, are subject to MPIT on 20% of their assets value.
Although this is an 'assets tax', the spirit of the law is to set a company's minimum income tax liability (for example, in the case of tax losses). Income tax assessed by the company may be creditable against MPIT for the same fiscal year.
If, in the same fiscal year, the income tax assessed is higher than the MPIT assessed, the net will not generate a tax credit. On the other hand, if in the same fiscal year the MPIT assessed is higher than the income tax assessed, the net of the MPIT may be carried forward and offset against income tax in the following ten fiscal years. Despite this tax credit, the company must pay effectively at least the amount of MPIT assessed every fiscal year. Therefore, every year the company must assess both taxes, yet pay either income tax or MPIT, whichever is the higher.
Single simplified tax: Single simplified tax is a volunteer tax applicable to individuals and small societies that perform little activity and where income does not exceed a threshold set by the Act. The taxpayer can choose whether to pay income tax and VAT or substitute both by paying a monthly single simplified tax. The tax is determined considering a scale of income.
Argentina Local TaxesThe different Provinces and Jurisdictions within the territory of Argentina apply local taxes. A brief description is provided as follows:
Turnover Tax: This is a provincial tax levied on the various stages of production and selling processes but no input tax is deductible from the tax amount of the immediately preceding stage (waterfall effect). In general, it applies to gross revenues accrued during each fiscal period (month). The tax rate is approximately 3% - 3.5% for commercial activities, 1.5% for industrial activities, and 1% - 1.5% for primary activities, according to the regulations enforced by each provincial Tax Act. Under an agreement signed between the National Administration and the Provincial Administrations, several exemptions to some productive activities have been established and the tax scheme will be reshaped gradually until this tax becomes ineffective and replaced by a neutral tax. In general, small industrial activities are not levied in the jurisdiction where the factory is located.
Stamp Tax: The duty is levied in each of the country's jurisdictions on juristic acts and instruments entailing a flow of wealth between the parties involved in the legal relationship. Thus, stamp tax is applicable inter alia to acts whereby transactions on Real Estate and civil, commercial or financial obligations are documented. Rates vary according to the jurisdiction and the type of instrument involved, the most common one being 1.00% of the contract value. Under the aforesaid fiscal agreement, stamp tax is also to be phased out in the future but is currently still in effect.
Land and Car Taxes: These taxes, typically ad valorem, are levied on land and automobiles located or registered within any of Argentina's 24 provinces. The fiscal assessment value of the assets and the applicable tax rate vary according to each jurisdiction.
Rates: These are municipal levies applied on a range of taxable bases in the various jurisdictions, in consideration of services provided by each township. The taxable event is the performance of an activity for profit in a town. The tax rate, set by each Municipal Act, is applicable on the turnover and depends on the activity performed.
Argentina Value added tax (VAT) RatesThe standard rate of Value Added Tax in Argentina is 21%.
The standard VAT is charged on the net price of the transaction. There are some leases and services levied at 27% (electricity, telecommunications, etc).
Some goods and services are levied at a reduced 10.50% VAT rate (bovine meat, fresh vegetables, lodgings, interests on loans received from Argentine financial institutions, property plant and equipment as specified in a list provided, newspapers and magazines, transportation for individuals etc).
Exports are levied at a zero VAT rate (destination country method). Exporters can apply input tax (incurred in making exports) against output tax arising from other taxable transactions. In case of a net input tax (internal charge), exporters are entitled to a refund (under a special procedure established by the tax authority). Foreign tourists are also entitled to a VAT refund (cash or in credit card account) included in personal property purchases and lodging services in some tourist areas.
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