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EY
+54 (11) 4318-1600
Fax: +54 (11) 4318-1777, C1002ABI Buenos Aires +54 (11) 4510-2220
25 de Mayo 487
Argentina
Principal Tax Contact
Carlos Casanovas
+54 (11) 4318-1619
Mobile: +54 (911) 3379-9705 Email: carlos.casanovas@ar.ey.com
International Tax and Transaction Services – International Corporate Tax Advisory
Gustavo Scravaglieri
+54 (11) 4510-2224
Mobile: +54 (911) 3059-0723 Email: gustavo.scravaglieri@ar.ey.com
Ariel Becher +54 (11) 4318-1686
Mobile: +54 (911) 3487-3126 Email: ariel.becher@ar.ey.com
International Tax and Transaction Services – Transaction Tax Advisory
Sergio Caveggia
+54 (11) 4515-2651
Mobile: +54 (911) 6575-5393 Email: sergio.caveggia@ar.ey.com
International Tax and Transaction Services – Tax Desks Abroad
Agustina Paradiso +1 (212) 773-3688 (resident in New York)
Mobile: +1 (917) 856-6838 Email: agustina.p.paradiso1@ey.com Pablo Wejcman
+1 (212) 773-5129 (resident in New York) Mobile: +1 (646) 295-8054 Email: pablo.wejcman@ey.com
International Tax and Transaction Services – International Capital Markets
Gustavo Scravaglieri
+54 (11) 4510-2224
Mobile: +54 (911) 3059-0723 Email: gustavo.scravaglieri@ar.ey.com
Ariel Becher +54 (11) 4318-1686
Mobile: +54 (911) 3487-3126 Email: ariel.becher@ar.ey.com
International Tax and Transaction Services – Operating Model Effectiveness
Gustavo Scravaglieri
+54 (11) 4510-2224
Mobile: +54 (911) 3059-0723 Email: gustavo.scravaglieri@ar.ey.com
International Tax and Transaction Services – Transfer Pricing
Carlos Casanovas
Gustavo Scravaglieri
+54 (11) 4318-1619
Mobile: +54 (911) 3379-9705 Email: carlos.casanovas@ar.ey.com
+54 (11) 4510-2224 Mobile: +54 (911) 3059-0723 Email: gustavo.scravaglieri@ar.ey.com
Milton Gonzalez Malla
+54 (11) 4318-1602
Mobile: +54 (911) 3697-0984 Email: milton.gonzalez-malla@ar.ey.com
Esteban Kacanas +54 (11) 4318-1780
Mobile: +54 (911) 6594-2855 Email: esteban.kacanas@ar.ey.com
Manuel Val Lema
Business Tax Services
Carlos Casanovas
Business Tax Advisory
Pablo Belaich
+54 (11) 4318-1607
Mobile: +54 (911) 3030-7761 Email: manuel.vallema@ar.ey.com
+54 (11) 4318-1619
Mobile: +54 (911) 3379-9705 Email: carlos.casanovas@ar.ey.com
+54 (11) 4318-1616 Email: pablo.belaich@ar.ey.com
Gustavo Consoli +54 (11) 4318-1705
Mobile: +54 (911) 3487-9491 Email: gustavo.consoli@ar.ey.com
Daniel Dasso
+54 (11) 4318-1694
Mobile: +54 (911) 5114-6999 Email: daniel.dasso@ar.ey.com
Diego Riesco +54 (11) 4318-1615 Email: diego.riesco@ar.ey.com
Tax and Finance Operate
Carlos Casanovas
+54 (11) 4318-1619
Mobile: +54 (911) 3379-9705 Email: carlos.casanovas@ar.ey.com
Tax Technology and Transformation
Santiago Ackermann
+54 (11) 4318-1600
Mobile: +54 (911) 5005-7788 Email: santiago.e.ackermann@ar.ey.com
Gustavo Consoli +54 (11) 4318-1705 Mobile: +54 (911) 3487-9491 Email: gustavo.consoli@ar.ey.com
Global Compliance and Reporting
Carlos Casanovas
Pablo Belaich
+54 (11) 4318-1619
Mobile: +54 (911) 3379-9705 Email: carlos.casanovas@ar.ey.com
+54 (11) 4318-1616 Email: pablo.belaich@ar.ey.com
Gustavo Consoli +54 (11) 4318-1705
Mobile: +54 (911) 3487-9491 Email: gustavo.consoli@ar.ey.com
Daniel Dasso
+54 (11) 4318-1694
Mobile: +54 (911) 5114-6999 Email: daniel.dasso@ar.ey.com
Silvia De Vivo +54 (11) 4318-1622 Mobile: +54 (911) 6461-2934 Email: silvia.de-vivo@ar.ey.com
Jorge Lapenta +54 (11) 4510-2249
Mobile: +54 (911) 6849-2814 Email: jorge.lapenta@ar.ey.com
Horacio Lopez +54 (11) 4318-1609 Mobile: +54 (911) 4024-1032 Email: horacio.lopez@ar.ey.com
Christian Micieli +54 (11) 4875-4837
Mobile: +54 (911) 6805-5358 Email: christian.micieli@ar.ey.com
Juan Pablo Mizutani +54 (11) 4318-1657 Email: juanpablo.mizutani@ar.ey.com
Fernando Montes
Silvana Morano
Diego Riesco
People Advisory Services
Javier Sabin
Indirect Tax
Gustavo Scravaglieri
Law
Jorge Garnier
A. At a glance
+54 (11) 4318-1760
Email: fernando.montes@ar.ey.com
+54 (11) 4318-1798
Mobile: +54 (911) 3773-5470 Email: silvana.morano@ar.ey.com
+54 (11) 4318-1615 Email: diego.riesco@ar.ey.com
+54 (11) 4318-1658
Mobile: +54 (911) 3067-9259 Email: javier.sabin@ar.ey.com
+54 (11) 4510-2224
Mobile: +54 (911) 3059-0723 Email: gustavo.scravaglieri@ar.ey.com
+54 (11) 4515-2634
Mobile: +54 (911) 3089-6870 Email: jorge.garnier@ar.ey.com
Corporate Income Tax Rate (%) 25 to 35 (a)
Capital Gains Tax Rate (%) 0/15/25 to 35 (b)
Branch Tax Rate (%) 25 to 35 (a)
Withholding Tax (%)
Dividends 0/7/35 (c)
Interest 15.05/35 (d)
Royalties from Patents, Know-how, etc. 21/28/31.5 (d)
Branch Remittance Tax 0/7/35 (c)
Net Operating Losses (Years)
(a)
For fiscal years starting from 1 January 2021, the corporate tax is calculated through a progressive scale ranging from 25% to 35%. The scale is updated annually based on the consumer price index. For 2022, annual income from ARS0 to ARS7,604,948.57 is subject to a 25% rate; income from ARS7,604,948.57 to ARS76,049,485.68 is subject to a 30% rate; income exceeding ARS76,049,485.68 is subject to a 35% rate. The amounts are updated annually based on the consumer-price index. An increased rate of 41.5% applies for certain gaming activities.
(b) The 15% rate generally applies to capital gains derived by foreign residents from sales of shares, quotas and other participations in entities. Capital gains derived by foreign residents from listed shares and corporate and government bonds, under certain circumstances, can benefit from an exemption. Argentine corporate residents are subject to the regular corporate tax at rates ranging from 25% to 35%.
(c) A 7% dividend withholding tax rate applies to dividends paid out of profits accrued in fiscal years started from 1 January 2018. Such rate applies to distributions made to resident individuals or foreign investors, while distribu tions to resident corporate taxpayers are not subject to withholding. A 0% dividend withholding tax rate generally applies to dividends paid out of profits accrued during fiscal years that started before 1 January 2018; how ever, in these cases, a 35% withholding tax (known as “equalization tax”) is triggered if the distribution exceeds the after-tax accumulated taxable income of the taxpayer.
(d) These are final withholding taxes imposed on nonresidents only. For details concerning the rates, see Section B.
B. Taxes on corporate income and gains
Corporate income tax. Resident companies are taxed on worldwide income. Any profits, including capital gains, are taxable.
Companies incorporated in Argentina and branches of foreign companies are considered to be resident companies.
Rates of corporate tax. Corporate tax is payable at a scale ranging from 25% to 35%. For 2022, annual income from ARS0 to ARS7,604,948.57 is subject to a 25% rate; income from ARS7,604,948.57 to ARS76,049,485.68 is subject to a 30% rate; income exceeding ARS76,049,485.68 is subject to a 35% rate. The amounts are updated annually based on the consumer price index. An increased rate of 41.5% applies for certain gaming activities.
Capital gains. Capital gains derived by tax-resident companies are included in taxable income and taxed at the regular corporate tax rate. Capital gains derived by foreign residents from the sale, exchange, barter or disposal of unlisted shares, quotas, participa tions in entities and titles are subject to a 15% tax (indirect sales are included under certain conditions). This tax may be calcu lated on actual net income or on 90% presumed income, thereby resulting in an effective 13.5% tax on the sale price.
Capital gains derived by foreign residents from the transfer of listed shares are covered by an exemption, to the extent that the investor is not resident in, and the funds do not arise from, “noncooperating” jurisdictions.
Administration. The tax year for a company is its accounting year. Companies are required to make 10 advance payments of corporate income tax. The first payment is equal to 25% of the preced ing year’s tax and the other payments are each equal to 8.33% of such tax. The payments are due monthly beginning in the sixth month after the end of the accounting year. The due dates depend on the company’s taxpayer registration number.
Companies must file their tax returns and pay any balance due by a specified date in the fifth month after their accounting year. If the payment is late, interest is charged.
Dividends. The dividend withholding tax rate is 7% for profits accrued in fiscal years started from 1 January 2018. The rates mentioned above apply to distributions made to resident indi viduals or foreign investors, while distributions to resident corpo rate taxpayers are not subject to withholding. A 0% dividend withholding tax rate generally applies for profits accrued during fiscal years that started before 1 January 2018; however, in these cases, a 35% withholding tax (known as “equalization tax”) is triggered if the distribution exceeds the after-tax accumulated taxable income of the taxpayer.
Withholding taxes on interest and royalties. Final withholding taxes are imposed on interest and royalties paid to nonresidents.
A withholding tax rate of 15.05% applies to the following types of interest payments:
• Interest on loans obtained by Argentine financial entities
• Interest on loans granted by foreign financial entities located in the following jurisdictions:
Jurisdictions not considered to be low- or no-tax jurisdictions under Argentine rules
Jurisdictions that have signed exchange-of-information agreements with Argentina and have internal rules providing that no banking, stock market or other secrecy regulations can be applied to requests for information by the Argentine tax authorities
• Interest on loans for the importation of movable assets, except automobiles, if the loan is granted by the supplier of the goods
The withholding tax rate for all other interest payments to non residents is 35%.
The general withholding tax rate for royalties is 31.5%. If certain requirements are satisfied, a 21% rate may apply to technical assis tance payments and a 28% rate may apply to certain royalties.
Foreign tax relief. Resident companies may credit foreign income taxes against their Argentine tax liability, up to the amount of the increase in that liability resulting from the inclusion of foreignsource income in the tax base.
Foreign tax credits are also available on the tax paid by the for eign entities in which the Argentine shareholder invests. In the case of a direct participation, a 25% minimum ownership is required, while in the case of an indirect ownership, a participa tion of at least 15% is required.
C. Determination of trading income
General. Tax is applied to taxable income, which is the accounting profit earned in the tax period after adjustments provided for by the tax law. Exemptions are usually insignificant.
Expenses are deductible to the extent incurred in producing tax able income, subject to certain restrictions and limitations, includ ing, among others, those applicable to the following:
• Representation expenses
• Directors’ fees
• Royalties for patents and trademarks paid to nonresidents
Depreciation, rental payments and all other automobile expenses, such as license fees, insurance, fuel and maintenance, are also deductible, subject to certain restrictions. In general, certain limitations apply to the deductibility of interest payments to related entities (see Section E).
Any expense incurred by an Argentine company in favor of a foreign related party that is deemed Argentine-source income for the recipient of the payment can be deducted for tax purposes in the year of accrual only if the payment is made by the date when the income tax return for that year is due. Otherwise, such expens es must be deducted in the year of payment. This limitation also applies to expenses paid to individuals or entities located in “noncooperating” or “low- or no-tax” jurisdictions, regardless of whether they are related parties.
Foreign-exchange losses. Foreign-currency gains and losses arising from customary business transactions are normally treated as business income or expenses for the year in which the exchange fluctuation occurs. In the case of debts with related parties, foreign-exchange losses are subject to the same deduction
restrictions as interest, except in those years in which the tax inflationary adjustment applies.
Inventories. Stock is valued according to procedures established by the tax law, which result in values nearly equal to its market value or replacement cost at the end of the tax period, depending on the type of goods.
Provisions. A provision for bad debts is allowed. However, it must be computed according to rules prescribed by the tax law.
Depreciation. Tangible assets may be depreciated using the straightline method over the assets’ expected lives. A method based on effective use may also be acceptable. In general, buildings are depreciated at an annual rate of 2%. However, a higher rate may be acceptable if it is established that, because of the materials used to construct the building, the expected useful life is less than 50 years. The law does not specify rates for movable assets. Intangible property may be depreciated only if it has a limited life based on its characteristics. Certain assets, such as goodwill and trade names, may not be depreciated.
Inflationary adjustment. Adjustment for inflation is allowed in accordance with the following rules:
• Inflation adjustment of new acquisitions and investments car ried out from 1 January 2018 and onward.
• Application of an integral inflation adjustment mechanism for fiscal years beginning on or after 1 January 2018 if the varia tion of the Consumer Price Index supplied by the National Institute of Statistics and Censuses is higher than 100% for the 36-month period before the end of the fiscal period.
Relief for losses. Tax losses may be carried forward for five tax periods. Loss carrybacks are not permitted. Certain losses have a specific nature and can only offset the same type of income, such as losses from sales of shares and other types of securities, losses from foreign-source activities and losses from gaming activities.
Except for hedge transactions, losses resulting from the rights contained in derivative instruments or contracts may offset only the net income generated by such rights during the fiscal year in which the losses were incurred or in the following five fiscal years. For this purpose, a transaction or contract involving derivatives is considered a hedge transaction if its purpose is to reduce the impact of future fluctuations in market prices or fees on the results of the primary economic activities of the hedging company.
D. Other significant taxes
The following table summarizes other significant taxes.
Nature of tax Rate (%)
Value-added tax (VAT), on goods delivered and services rendered in Argentina, on services rendered outside Argentina that are used or exploited in Argentina, and on imports Standard rate
Other rates
Nature of tax Rate (%)
Tax on financial transactions; generally imposed on debits and credits with respect to checking accounts; a portion of the tax may be creditable against other taxes
General rate 0.6
Other rates 0.05/0.075/0.1/ 0.25/0.5/1.2
Various local taxes on gross receipts, real estate and other items Various Social security taxes (including medical care contributions), on monthly salaries; paid by employer; a portion may be creditable against VAT; the creditable portion varies depending on where the employees render services 24/26.4 Export duties on goods; general rate; other rates apply to certain exports (oil, grains and others) 5 Tax on personal assets; imposed on all legal persons and individuals domiciled abroad holding ownership interests in Argentine companies; tax is calculated based on the equity value of the Argentine company; tax is paid by the Argentine company, but the company may recover the tax paid from the foreign shareholder 0.5
E. Miscellaneous matters
Foreign-exchange controls. From September 2019, the govern ment has reintroduced certain foreign-exchange controls which are periodically reviewed and redefined.
Exporters must repatriate into Argentina the cash derived from exports of goods and services, among other items, within a specified time period.
Funds derived from loans granted from abroad must be settled in the Argentine foreign-exchange market in order to be able to make the repayment using the same mechanism.
Payment of debts to foreign parties can be routed through the foreign-exchange market subject to compliance with certain requirements.
Payments for imports of goods can be routed through the foreignexchange market subject to certain conditions. In the case of payments for services rendered by nonresidents, prior clearance by the tax authorities is required through the Comprehensive System Monitoring Payments for Services Abroad (Sistema Integral de Monitoreo de Pagos al Exterior de Servicios, or SIMPES); in addition, prior Central Bank of Argentina approval is needed if the payment is made to a related party. Payment of dividends is also subject to the Central Bank of Argentina’s approval. The Central Bank of Argentina’s prior approval is also needed to access the foreign-exchange market to make invest ments abroad.
Interest deductibility limitation. Under general principles, trans actions between related parties must be made on an arm’s-length basis.
The Argentine income tax law establishes a limit for the deduc tion of interest arising from financial loans granted by related parties. The limit equals 30% of earnings before interest, taxes, depreciation and amortization (EBITDA) or a certain amount to be determined by the Executive Power (currently ARS1 million), whichever is higher. The limit each year is increased by the amount unused (if applicable) in the prior three years. In addition, if certain interest was not deductible in a given year due to the application of the limitation, it can be carried forward for five fiscal years. For this purpose, interest includes foreignexchange differences (however, comprehensive inflationary adjustment applies).
The law provides exemptions from the deduction limit for certain situations (for example, the interest is derived on loans obtained by Argentine banks and financial trusts or the beneficiary of the interest has been subject to tax on such income in accordance with the Argentine income tax law). In addition, the limitation does not apply to situations in which it is proved that the ratio of interest to EBITDA of the Argentine borrower is equal to or lower than the same ratio for its economic group with respect to debt with unrelated lenders for the same fiscal year.
Transfer pricing. The Argentine law includes transfer-pricing rules that generally apply to transactions between related parties. In addition, transactions between unrelated parties may also be subject to these rules. Transactions with entities and individuals located in “non-cooperating” or “low- or no-tax” jurisdictions are deemed to be not carried out at arm’s length.
In addition, the Argentine law includes rules on analyzing trans actions involving the import or export of goods with the participation of a foreign intermediary that is not the actual importer at destination or exporter at origin, respectively, if at least one of the foreign parties involved (that is, the intermediary, importer or exporter) is a related party. In these cases, the law requires proof that the foreign intermediary’s remuneration is in line with the risks it assumes, the functions it carries out and the assets involved.
The law provides for the following transfer-pricing methods:
• Comparable uncontrolled price method
• Resale price method
• Cost-plus method
• Profit-split method
• Transactional net margin method
For exports of goods with known prices and with the intervention of an intermediary that is related, or located in “non-cooperating” or “low- or no-tax” jurisdictions, the income tax law requires the Argentine exporter to file the agreements supporting the transac tions with the federal tax authorities (Administración Federal de Ingresos Públicos, or AFIP). If the agreements are not filed, the Argentine-source income from the export is determined consid ering the known prices on the date the goods are loaded into the
transportation vehicle, with appropriate comparability adjust ments, if applicable.
F. Treaty withholding tax rates
Some of Argentina’s tax treaties establish maximum tax rates lower than those under general tax law. To benefit from a reduced treaty withholding tax rate, certain formal requirements must be met. The following table shows the lower of the treaty rate and the rate under domestic tax law.
Dividends (a) Interest (c) Royalties (c) % % %
Australia 10/15 (b) 0/12 10/15
Belgium 10/15 (b) 0/12 3/5/10/15 (d)
Bolivia 0/7/35 15.05/35 21/28/31.5 (h)
Brazil 10/35 (b) 15 10/15 (e)
Canada 10/15 (b) 0/12.5 3/5/10/15 (d)
Chile 10/15 (b) 4/12/15 3/10/15
Denmark 10/15 (b) 0/12 3/5/10/15 (d)
Finland 10/15 (b) 0/15 3/5/10/15 (d)
France 15 15.05/20 18
Germany 15 10/15 15
Italy 15 15.05/20 10/18 (f)
Mexico 10/15 (b) 0/12 10/15
Netherlands 10/15 (b) 0/12 3/5/10/15 (d)
Norway 10/15 (b) 0/12 3/5/10/15 (d)
Qatar 5/10/15 (g) 0/12 10
Russian Federation 10/15 (b) 15 15
Spain 10/15 (b) 0/12 3/5/10/15 (d)
Sweden 10/15 (b) 0/12 3/5/10/15 (d)
Switzerland 10/15 (b) 0/12 3/5/10/15 (d)
United Arab Emirates 5/10/15 (g) 0/12 10
United Kingdom 10/15 (b) 0/12 3/5/10/15 (d)
Uruguay 0/7/35 15.05/35 21/28/31.5 (g)
Non-treaty
jurisdictions 0/7/35 15.05/35 (f) 21/28/31.5 (g)
(a) The rates shown in the table apply only if the corresponding domestic with holding rate is higher than the tax treaty rate. According to the domestic law, the dividend withholding tax rate is 7% for profits accrued during fiscal years starting from 1 January 2018. A 0% dividend withholding tax rate generally applies for profits accrued during previous fiscal years; however, in these cases, a 35% withholding tax (known as “equalization tax”) may be triggered if the distribution exceeds the after-tax accumulated taxable income of the taxpayer.
(b) These treaties establish maximum rates of 10% or 15%. The 10% rate applies if the beneficial owner of the dividend is a company that controls, directly or indirectly, at least 25% of the voting power of the payer. The 15% rate applies to other cases.
(c) The rates listed are the lower of the treaty or statutory rates. For details con cerning the domestic rates, see Section B.
(d) In general, the rates apply to the following categories of payments:
• 3% for the use of, or right to use, news
• 5% for the use of, or right to use, copyrights of literary, dramatic, musical or other artistic works (but not royalties with respect to motion picture films and works on film or videotape or other means of production for use in connection with television)
• 10% for the use of, or right to use, industrial, commercial or scientific equipment or patents, trademarks, designs, models, secret formulas or pro cesses, or for the use of or information concerning scientific experience, including payments for the rendering of technical assistance
• 15% for other royalties
These categories may differ slightly from treaty to treaty.
(e) The 15% rate applies to royalties for the use of, or right to use, trademarks. The 10% rate applies to other royalties, under certain conditions.
(f) The 10% rate applies to royalties for the use of, or right to use, copyrights of literary, artistic or scientific works. The 18% rate applies to other royalties.
(g) The 5% rate applies if the beneficial owner of the dividend is a government of the other contracting state. The 10% rate applies if the beneficial owner of the dividend is a company that controls, directly or indirectly, at least 25% of the voting power of the payer. The 15% rate applies to other cases.
(h) For details concerning these rates, see Section B.