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Taxation
Taxes are levied in Argentina by the National
Government, the Provinces and the local Town Hall
authorities. Most taxes are levied as indirect
consumer taxes as they are easier to collect.
Traditionally Argentine Tax Law was based on the
principle of taxation at source. A considerable
reform of the tax system in April 1992 abandoned
this principle by establishing the taxable
transactions on an international basis. Therefore,
individuals and companies resident in Argentina
are liable for taxes on a worldwide income and
profit basis. Corporate Income
Tax The tax rate applicable to the taxable
income of Argentine corporations is 30%. The
same rate applies to the silent equity of stock
issuing partnerships. The distribution of dividends
is not taxed further. There is no provincial income
tax in Argentina. The income tax rate for branches
and other permanent establishments belonging to
foreign companies or non-residents is 30% of their
taxable income. There are no differences between
the tax treatment of branches and that of
corporations. Limited liability partnerships are
required to report their taxable income, showing
its allocation to the partners, who must bring it into
their personal income tax returns and pay tax
thereon at the progressive rates applicable to
them. The same treatment applies to the active
equity of stock issuing partnerships. Argentina
adopted the worldwide taxation; therefore,
Argentine corporations are now required to report
their taxable income on a worldwide basis, and are
granted relief from Argentine income tax in respect
of foreign income taxes paid. A number of income
tax withholdings apply to business entities; these
must be made by customers, banks and other
parties, in respect of sales, interest, rent and lease
payments, and so forth. Income Tax on
Individuals A calendar year basis is used
for individual taxpayers. Individuals who have been
resident in Argentina at least six months of the
year may claim personal allowances. For
determining their taxable income, individuals may
also recognize deductions in respect of their
contributions to social security funds and medical
plans, life insurance premiums (up to a maximum
annual limit), funeral expenses (subject to an
annual limitation), contributions to retirement
plans (up to an annual limit), fees paid to health
and medical funds (up to an annual limit), and
donations (up to an annual limit), as well as
financing expenses for the purchase of assets or
services connected with the obtainment of certain
types of taxable income. Resident individuals are
required to report their taxable income on a
worldwide basis. In this connection, they may claim
a tax credit for any related foreign income taxes
paid. This tax credit is limited to the corresponding
increase in their tax liability. Resident individuals
are taxed at progressive rates, ranging from 11 to
30%. There is no provision for filing joint returns,
so husband and wife must keep their incomes
separate and file separate returns. Salaries and
wages are subject to income tax withholding at
source. Amounts collected for the sale of goods or
rents, interest, fees, commissions, etc. above
certain limits are subject to income tax
withholding. Non-resident individuals working
temporarily in Argentina (i.e., those who spend less
than 6 months of a given calendar year in the
country) are entitled to a flat expense allowance
equivalent to 30% of their Argentine source
income. They are taxed at a straight 30% rate on
the excess, so their effective tax rate is 21%.
Instead, a 1.5% tax on the selling price of real
estate transfers effected by individuals has been
Income Tax on Non-
introduced.
ResidentsDividends distributed by
Argentine companies are not subject to
withholding tax. As in the case of dividends, the
remittance of profits by branches or other
permanent establishments belonging to foreign
companies is not subject to any tax or
withholdings. Any other Argentine source profits
paid to non-resident beneficiaries (including those
collected in Argentina whilst the beneficiaries have
not established permanent residence in this
country) are subject to a flat 30% income tax
withholding if they are of Argentine source and are
not covered by any other special provision. Under
the special provisions covering payments to non-
resident beneficiaries, royalties covering technical
assistance, engineering or consulting services
rendered in Argentina but not otherwise available
here are subject to an effective withholding rate of
18%, provided the underlying contracts fulfil the
requirements of the technology transfer law, while
royalties for operating patents and other types of
consideration covered by contracts fulfilling the
requirements of this law are subject to an effective
withholding of 24%. Royalties paid to non-residents
under copyrights registered with the National
Copyright Board are subject to an effective
withholding of 10.5%. Interest payments to non-
residents are in general subject to an effective
withholding tax at the rate of 12%. Social
Security Taxes The main social security
rates levied in Argentina are:
EMPLOYER
EMPLOYEE
CONTRIBUTION
WITHHOLDINGS
S
PENSION FUND 16 % 11 %
FAMILY SUBSIDY
9% ---
FUND
HEALTH SCHEME 6% 3%
PENSION
2% 3%
INSTITUTE
TOTAL 33 % 17 %
A Federal Covenant has effected a reduction of
employers contributions of up to 60% depending
on jurisdiction, on the following sectors: primary,
industry, construction and tourism. An obligatory
legal bonus [NOTE: "aguinaldo"], equivalent to one
month's salary per year, is also subject to similar
contributions. Professionals, researchers, scientists
and technicians engaged abroad to work in
Argentina for one tour of duty not exceeding two
years may apply for exemption from Argentine
pension fund withholdings and employer
contributions provided they have not taken out
permanent residence here, and that they are
covered against the contingencies arising from old
age, disability and death in their country of
nationality or permanent residence. When the
exemption is granted, it applies as from the date of
Value Added Tax
filing. V.A.T. ("IVA")
has a very broad scope, as it is levied at all stages
of importation, production and trading, including
retailing, as well as on a wide range of services
(including bank charges and interest). The
standard rate is 18% (temporarily raised to 21%
for a year beginning March 1995). [NOTE: no sign of
falling ... ]All sales of movable assets on the
domestic market (as well as imports thereof) are
taxed unless specifically exempt under the law.
Practically the only exemptions regarding movable
assets concern publications (books, pamphlets,
periodicals, magazines, and so forth), shares and
other securities, and sales of bread, milk and
common water in its natural state to consumers as
well as sales of medicines for human use by
wholesale druggists and chemist stores (i.e., their
sale by the laboratories that manufacture them is
taxed). Property sales are taxed (including the
value of the land) only when undertaken by
building companies (when the full or partial
construction or sale of the property is undertaken
with a profit motive) or companies that had
earmarked the properties for activities subject to
V.A.T. and had recognized fiscal credits for the
construction thereof in the last ten years. The
leasing and rendering of services is in general
subject to V.A.T. as well, with very few exceptions.
The latter include life insurance, retirement
insurance, passenger transport, property rentals,
most educational and health services, stock
exchange transactions, admissions to sporting
events and artistic events or performances, the
services of directors and syndics of corporations,
employees' salaries, news agency services, radio
and TV broadcasting and media advertising space.
Exports are not subject to V.A.T., and exporters
may in addition obtain a refund on the tax credit
for V.A.T. billed to them for the goods exported.
Imports are subject to V.A.T. at the rates
corresponding to the items involved.Parties liable
for V.A.T. whose income has been below $ 144,000
(for the resale of goods) or $ 96,000 (for other
activities) in the previous calendar year have the
option not to register. Registered taxpayers or the
Customs House are required to bill and collect from
their purchasers (or importers) who are liable but
not registered for V.A.T. an excess tax equivalent
to 18% of a flat estimated profit of 50%; i.e. 9% in
addition to the standard 18% tax. It is compulsory
for all business concerns (whatever their nature
and size) to issue vouchers (invoices, receipts,
cash sales slips, work certificates, etc.) showing
the place and date of issuance, name and address
of the issuer and the buyer; the issuer's tax
registration numbers; a reference to whether the
issuer is held responsible (liable) or not for V.A.T.,
with a similar reference concerning the recipient of
the voucher, and a detailed description of the sale
or service involved. These invoices must be
prenumbered sequentially. There are penalties for
breaches of the related regulations, which cover a
very wide scope and can even extend to the
closure of the issuing company (there are a few
exceptions, such as banks, insurance companies,
admission tickets, passenger tickets, fuel sales to
the public, sales under a minimal limit, etc.). Their
purpose is to contribute to the avoidance of tax
Tax on Personal Non-
evasion.
Taxes on Motor
planning).