Argentina: Tax system

Tax Rate For Foreign Companies

Residents and non-residents are subject to the same tax treatment. Non-resident companies are only taxed on their Argentina-sourced income.
Argentine-source income (e.g. royalties, interests) received by foreign entities is subject to withholding tax in full and final settlement at source.

Capital Gains Taxation

Most capital gains are included in taxable income and taxed at the normal corporate income tax rates. Gains derived from the transfer of shares, bonds, and other securities are subject to tax at regular CIT rates (25% to 35%). Gains derived by a non-resident from the sale of equities of an Argentine corporation or other participation in the capital of an Argentine entity that is not publicly traded are subject to an effective rate of 13.5% on gross proceeds or a 15% income tax on the net gain if the seller’s tax cost basis can be duly documented for Argentine tax purposes.
The sale of corporate bonds placed by public offer, government bonds and notes issued by financial trusts are generally exempt.

Main Allowable Deductions and Tax Credits

Expenses are deductible if incurred for obtaining and preserving taxable income, as well as for taxes paid, depreciation or amortisation, reserves, directors' fees, wages and donations of up to a maximum of 5% of net taxable profits. R&D expenditures (for the development of intangible assets) may be deducted when they are incurred or amortised over not more than five years, the same as for start-up expenses. Bad debts can be deducted only in specific cases (like bankruptcy or prescription) and if supporting documentation is provided. Representation expenses are deductible up to 1.5% of the amount of salaries accrued during the fiscal year.
Interests deduction is limited to the higher of 30% of EBITDA or ARS 1 million.
Net operating losses may be carried forward for five years, whereas loss carrybacks are not allowed. Foreign-source losses must be offset against income from similar sources. The amortisation of goodwill cannot be deducted for profits tax purposes.
All deductions are subject to review by the tax authorities.

Other Corporate Taxes

Sales taxes are levied at jurisdictional level, generally at a rate of 3% to 5% of gross revenue from the sale of goods and services. Higher rates may be imposed on certain services in some provinces. Industrial activities usually are exempt or subject to lower rates (between 0 and 2%). Jurisdictions also levy a real estate tax, with rates varying according to the location and the property’s fiscal value.

A financial transactions tax of 0.6% is levied on deposits and withdrawals in current accounts; as well as a 1.2% tax on any transactions made in a bank without using a bank account. 33% of the aforementioned taxes are creditable against profits tax and minimum notional income tax and/or respective tax advances.

Stamp duty of 1% is levied on the formal execution of public and private instruments including contracts, notarial deeds and promissory notes. Special rates of 0.5%, 1.2%, 3%, and 3.6% apply in certain cases.

An annual wealth tax is levied on the shares or holding in the capital of local companies owned by individuals or undivided estates domiciled in Argentina or abroad, and/or companies and/or any other type of legal person domiciled abroad. The tax rate is 0.5% of the value of the participation. Such tax does not apply to foreign companies' branches in Argentina. The non-taxable minimum is ARS 6,000,000. In the case of residential real estate where the owner lives, such assets will be exempted from taxation if their value is up to ARS 30,000,000.

Employers contribute to the national unemployment fund, family allowances fund, and social services institute for pensioners at a unified rate of 18% (20.4% for companies who mainly render services or commerce and are above the SME's threshold); plus 6% for the social health care plan. Argentine employers are exempt to pay social security contributions for the first ARS 7,003 per month/employee (plus an additional allowance of ARS 10,000 for small employers with no more than 25 employees). The exempt amount is increased to ARS 17,509 for employers in the textile, leather goods, agricultural industries, and healthcare services sector.
Employers must also contribute to the labour risk insurance (ARS 49.98 per month plus a percentage of the employee's salary according to the sector of activity), as well as to a life insurance fund (ARS 24.35 per month).

Other Domestic Resources

Federal Administration of Public Revenue (AFIP)

Doing Business: Argentina, to obtain a summary of taxes and mandatory contributions

Country Comparison For Corporate Taxation

Accounting System

Accounting Standards

Accounting standards are developed by a national professional body, the Argentine Federation of Professional Council in Economic Sciences (FACPCE). The Central Bank and the National Insurance Superintendency supplement the professional accounting standards with rules designed specifically for entities under their control. Certain rules of these two regulators may give rise to material departures from the accounting standards.
Currently, financial entities are moving to IFRS, in accordance with a decision of the Central Bank that requires the full application of IFRS by 2018.

Accounting Regulation Bodies

Contaduria General de la Nación (Argentine Accountant General), Argentine Accountant General
Federación Argentina de Consejos Profesionales de Ciencias Economicas (Argentine Federation of Professional Councils of Economic Sciences), Organisation responsible for accounting technical standards

Accounting Law

Law #19,550 (in Spanish), 3rd April 1972.

Difference Between National and International Standards (IAS/IFRS)

Listed companies other than banks and insurance companies as well as SMEs are required to prepare their financial statements using IFRSs. Banks need to apply BCRA (Central Bank of the Argentine Republic) standards converged with IFRSs starting from 2018.

Accounting Practices

Tax Year

The tax year begins on 1 January and finishes on 31 December of the same year.

Accounting Reports

All commercial companies in Argentina have to draw up certain accounting documents yearly, including the journal, ledger and a follow up of stock evaluation.

Companies are obligated to draw up a balance sheet and a profit and loss account and to submit the documents annually for approval by auditors (from within or outside of the company).

Publication Requirements

Annual financial statements and an auditor’s opinion must be submitted.

Public companies must file interim and annual financial statements with the National Securities Commission and the Buenos Aires Stock Exchange, respectively. The quarterly and annual filings must include consolidated and separate financial statements allowing comparison with the previous year or period.

A private company files its annual financial statements with the Corporate Inspection Department (Inspección General de Justicia) of the relevant jurisdiction.

Accountancy Profession

Accountants

The 'Contador Auditor' (chartered accountant) manages the accounting and certifies it within the company.

The 'Contador Publico Independiente' (auditor) certifies the accounts of the contador auditor.

Professional Accountancy Bodies

Professional Council of Economic Sciences, Accounting Professionals
Argentine Federation of Professional Councils of Economic Sciences, Advisory Professionals

Member of the International Federation of Accountants (IFAC)

The Argentine Federation of Economic Sciences Professional Councils is a member of IFAC.

Member of Other Federation of Accountants

Argentina is a member of the Association of International Accountants.

Audit Bodies

Companies must seek a statutory auditor to conduct an annual audit of the financial health of their organisation. Some examples include KPMG, Deloitte, and PriceWaterhouseCoopers.

Allowable Deductions and Tax Credits

Employees are subject to withholding tax at source, for which the employer is responsible (withholding agent). Social security contributions withheld by the employer and personal deductions are deductible from employment compensation for income tax purposes.
There are several types of allowances or tax reductions: ARS 260.580 for individuals who have been living in Argentina for at least six months during the calendar year, ARS 235.457,25 for spouses, ARS 118.741,97 for each child younger than 18 years, ARS 335,356.79 for self-employed workers, ARS 419,196.02 for new professionals/entrepreneurs.

Donations to tax-exempt charitable institutions are deductible up to a maximum of 5% of net income, same as for contributions to third-party medical schemes. Other medical expenses may be deducted up to a maximum of 40% of all corresponding invoices of the fiscal year (still capped at 5% of net income). Life insurance purchased from local authorised insurance companies and funeral expenses are deductible (up to limits set annually).

Individuals can deduct up to 40% of their rental expenses (up to a maximum of ARS 167,678.40), provided that they correspond to their dwelling and do not own any real property.
Mortgage and all other interest, alimony, education and childcare expenses are not deductible.

Special Expatriate Tax Regime

Non-resident and foreign beneficiaries are only taxable on their Argentine-source income.
Foreign beneficiaries working temporarily in Argentina for no more than six months during the year, who earn income through either the visual or performing arts or another profession, are subject to a final income tax rate of 24.5% (35% on assumed profit of 70% of gross income) to be withheld by the local payer.

Capital Tax Rate

Resident individuals with total assets above ARS 6 million are subject to Personal Assets Tax at rates ranging from 0.5% to 1.75%. For non-residents, the rate is 0.5% and applies to their assets located in Argentina (does not apply if the tax liability is lower than ARS 250). Equity interests in Argentine companies are subject to a 0.5% tax. Assets located outside of Argentina are subject to higher rates, ranging between 0.7% and 2.25%.

The financial transactions tax of 0.6% on debits and credits in current accounts does not apply on employment compensation and pension payments.
Stamp duty of 1% is levied on the formal execution of public and private instruments including contracts, notarial deeds and promissory notes. Special rates of 0.5%, 1.2%, 3%, and 3.6% apply in certain cases.

Employees contribute to the national unemployment fund, family allowances fund, and social services institute for pensioners at a unified rate of 14%; plus 3% for the social health care plan (subject to a salary cap and an exemption for a portion of the salary; updated 4 times every year in line with inflation).

A tax on real properties is levied annually by provincial authorities, the same as for automobile duty. The province of Buenos Aires has gift and inheritance taxes.

Gross income tax ("Ingresos Brutos") is a provincial tax applicable to self-employed individuals on gross earnings. The average tax rate is 4% in the Federal Capital, with similar rates applying in other provinces. The tax is paid by filing monthly tax returns.