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Argentina tax system - Brief Summary
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Argentina tax system - Brief Summary

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Brief summary of tax system in Argentina, prepared by Fidem Partners.

Brief summary of tax system in Argentina, prepared by Fidem Partners.
www.fidem.com.ar

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Argentina tax system - Brief Summary Argentina tax system - Brief Summary Presentation Transcript

  • ArgentinaTaxSystem - Briefsummary-
  • IncomeTax
    Withholding Tax on Non-Residents
    • Tax Treaties
    Tax on Presumed Minimum Income
    Value Added Tax (VAT)
    Turnover Tax (Tax on Revenue)
    Stamp Tax
    Personal Assets Tax
    Shares and Equity Interests
    Tax on Credits and Debits in Bank Accounts
    Transfer Pricing
  • IncomeTax
    • Worldwide income criteria.
    • Non-resident individuals or legal entities without a permanent establishment in Argentina are taxed only on income from Argentine sources.
    • Loss Carryforward:Losses incurred during any fiscal year may be carried forward and set off against taxable income obtained during the following five fiscal years.
    • Tax rate:(35%). Distribution of dividends to shareholders in SAs, or the distribution of income to partners in SRLs and remittances of profits abroad by branches or establishments are in general not subject to tax in Argentina.
    • The ITL provides for a 35% withholding tax to be applicable to the amount of dividends and earnings distributed in excess of a company’s net taxable income. (equalization tax).
    • The income of individuals is subject to tax upon a sliding scale which begins at the rate of 9%, increasing to 35% on taxable income exceeding ARS 120,000
  • Withholding Tax on Non-Residents
    • Any income or gain, obtained by a non-resident individual or a foreign legal entity without a permanent establishment in Argentina, is subject to withholding tax.
    • Any income or gain, obtained by a non-resident individual or a foreign legal entity without a permanent establishment in Argentina, is subject to withholding tax.
    • Technical assistance agreements, engineering or consulting services that the authorities consider unavailable in Argentina with contract registered in compliance with the Transfer of Technology Law: 21% (grossing up 26.58%);
    • Contracts registered in compliance with the Transfer of Technology Law and not included among those mentioned above: 28% (grossing up 38.89%);
    • Copyright royalties paid according the requirements of the Copyright Law: 12.25% (grossing up 13.96%);
    • Interest on loans obtained abroad: 35% (grossing up 53.85%),
    • Payments to non-residents working period not exceeding six months: 24.5% (grossing up 32.45%);
    • Rental payments on moveable property: 14% (grossing up 16.28%);
    • Rental payments on real estate: 21% (grossing up 26.58%);
    • Proceeds from the sale of any type of property: 17.5% (grossing up 21.21%); and
    • General withholding rate for income, other than dividends, not specifically mentioned above: 31.5% (grossing up 45.99%).
  • Withholding Tax on Non-Residents – Tax Treaties
    • Argentina has tax treaties in force with the following countries:
    • Australia; Belgium; Bolivia; Brazil; Canada; Chile; Denmark; Finland; France; Germany; Italy; Mexico; Norway; Spain; Sweden; Switzerland; Netherlands; Russia; United Kingdom;
    • These treaties are based upon the OECD model and particularly seek to avoid double taxation.
    • There is no tax treaty between Argentina and the United States.
  • Tax on presumed Minimum Income
    • Applies to all assets of Argentine companies and other entities, and permanent establishments of foreign entities and individuals in Argentina.
    • Applies if the total value of the assets exceeds ARS 200,000 at the end of the entity’s financial year. In this case, the total value of the assets will be taxed at the rate of 1%.
    • Any tax payable hereunder is allowed as a credit toward normal corporate income tax. It may be carried forward as a credit for the following ten years. This credit can be compensate when income tax exceeds presumed minimum income tax of the year.
  • Value Added Tax (VAT)
    • Any tax payable hereunder is allowed as a credit toward normal corporate income tax. It may be carried forward as a credit for the following ten years. This credit can be compensate when income tax exceeds presumed minimum income tax of the year.
    • Applies to the sale of goods, the provision of services and the importation of goods.
    • Under certain circumstances, services rendered outside Argentina which are effectively used or exploited in Argentina, are subject to VAT.
    • The tax is levied on the difference between the so-called "tax debit" and the "tax credit“.
    • The difference between the "tax debit" and the “tax credit", if it is positive, constitutes the amount to be paid to the Tax Authority.
    • General rate for this tax is 21%. Sales and imports of capital goods are however subject to VAT at a lower tax rate of 10.5%.
  • Gross Revenue Tax
    • Gross Revenue tax is a local tax levied on gross revenue.
    • Each of the provinces apply different tax rates;
    • Common rates:
    • 1% rate on agricultural, cattle breeding and mining activities, 1.5% on industrial activities, 3% on trade or services in general, and 5.5% on financial activities
    • The tax is levied on the amount of gross income resulting from business activities carried on within the respective provincial jurisdictions.
    • The provinces have signed an agreement ("Multilateral Agreement") to avoid the double taxation of activities performed in more than one province.
  • Stamp Tax
    • Local tax levied on public or private instruments, executed in Argentina or when executed abroad, when their effects are produced in one or more relevant jurisdictions within Argentina.
    • Definition of “effects” varies in the different local tax codes. However, most codes include within the definition acceptance, protest, negotiation of the agreement, performance and the institution of enforcement proceedings for compliance.
    • This tax is calculated on the economic value of the agreement. General rates from 0.8% (Capital Federal) to 1% (Buenos Aires). In the City of Buenos Aires the scope of is tax has been enlarged since 2009.
  • Personal Assets Tax
    • All individuals residing in Argentina are subject to a tax upon their worldwide assets.
    • Individuals not residing in Argentina are only liable for this tax upon their assets located in Argentina.
    • Shares, negotiable obligations and other securities are only deemed to be located in Argentina when issued by an entity domiciled in Argentina.
    • Rate: from 0.50% to 1.25% if the value of the assets owned by the taxpayer on 31 December of each relevant fiscal year excess of ARS 305,000.
  • Shares and Equity Interests
    • Irrefutable presumption that shares and equity interests in Argentine corporations owned by any kind of foreign entity, are owned by an individual domiciled abroad and are, therefore, subject to the tax.
    • Rate is 0.5%.
    • The Argentine issuer company is liable for the payment of such tax and it is entitled to seek recovery from the foreign entity.
  • Tax on Credits and Debits in Bank Accounts
    • Irrefutable presumption that shares and equity interests in Argentine corporations owned by any kind of foreign entity, are owned by an individual domiciled abroad and are, therefore, subject to the tax.
    • Levied upon debits and credits in bank accounts and other transactions similar or could be used in substitution for a checking account.
    • Transfers and deliveries of funds also fall within the scope of this tax.
    • Not apply to debits and credits relating to salaries, to retirement and pension emoluments credited directly by banking means and withdrawals made in connection with such credits, to credits in checking accounts originating from bank loans, and to transfers of cheques by endorsement.
    • General rate of the tax is 0.6%. An increased rate of 1.2% applies in cases in which there has been a substitution for the use of a checking account.
    • Owners of bank accounts subject to the general rate of the tax of 0.6% may consider 34% of the tax paid upon credits to such bank accounts as a tax credit.
    • Such amounts can be utilized as a credit for Income Tax and the Tax on Minimum Presumed Income.
  • Transfer Pricing
    • Transfer pricing practices are considered to take place when an Argentine company enters into business transactions with:
    a related company located abroad, or
    a non-related company located in a low tax jurisdiction,
    • The Argentine taxpayer is only able to deduct payments made to a related company or to an abroad non-related company, to the extent that it can establish that the price paid is one that would have been paid in an arm's-length transaction.
    • Special reports, containing detailed information including data and supporting documentation, must be submitted in order to establish that the terms of the transaction are equivalent to an arm’s length transaction (“arm’s length compliance”)
    • Different methods in line with OECD guidelines can be used to establish “arm’s length compliance”, such us comparing prices, margins, levels of profit, etc.
  • Forfurtherinformation, contactus:
    Dario H. Diaz
    ddiaz@fidem.com.ar
    Pablo E. Soto
    psoto@fidem.com.ar
    Marcelo A. Landeira
    mlandeira@fidem.com.ar
    Working Ocampo
    Ortiz de Ocampo 3302 – Mod.2 – Of. 10
    (C1425DST) - Buenos Aires – Argentina
    +5411 5277 8000 / 4809 3225
    www.fidem.com.ar