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  • Residence and basis for taxation

    In Argentina coexist three levels of taxation which are Federal, Provincial (state) and Municipal level.

    An entity is deemed as resident for tax purposes when it is incorporated in Argentina under the laws of Argentina. An Argentine individual is considered a tax resident unless he or she loses his tax residence status by choice, obtains legal residence in other country, or by fact, when the individual is outside the country for at least a twelve months period, with certain exemptions.

    Domestic 

    Local entities and resident individuals are subject to income tax on domestic and foreign source income.

    Foreign 

    Non resident entities or individuals are taxed on income of Argentine source. The tax applicable is the income tax that comprises corporate earnings and capital gains. In general, a local resident paying to a foreign entity or individual is obliged to withhold income tax. The withholding rate varies in connection with the type of the payment.

    Permanent establishments are taxed as local entities on income attributable to the permanent establishment.

    Income tax on indirect transfer

    Income tax on an indirect transfer may apply if a non resident entity is transferred provided that at least 30 percent of value of the entity is represented by assets located in Argentina and provided that the transferor owns at least 10 percent of the capital of such entity.

  • Taxable income

    Domestic

    In general the taxable income in the income tax for resident entities and resident individuals is equal to gross earnings minus deductions. In general, all expenses incurred to obtain, maintain and preserve taxable income are deductible unless expressly forbidden.

    Foreign 

    Non resident entities and individuals are taxed in the income tax on the incomes of Argentine source. The local resident paying to a foreign entity or individual is obliged to withhold the income tax at a 35 percent tax rate applied on a presumption of taxable income that varies in connection with the concept by which the payment is made. The presumption of taxable income can be from 35 percent up to 90 percent of the amounts paid.

    For incomes connected to the transfer of shares, bonds or titles, or incomes connected with the rental of real estate or the transfer of assets located in Argentina owned by a non resident, the non resident individual or entity is entitled to choose to apply the presumption of income or to present evidence of all the expenses incurred and deduct those expenses from the gross amount to be paid.

  • Tax rates

    Domestic

    Local entities are subject to an income tax rate of 30% for fiscal year 2019 and 25% as of fiscal year 2020.

    In general, local individuals are taxed at a progressive tax rate that goes from 5% to 35%, except for earnings with a fixed tax rate. Those are the following:

    • For local individuals the transfer of sovereign bonds, or any title is taxed at a 5% income tax rate if the title is issued in Argentine pesos, or 15% income tax rate if a share of a corporation is transferred, or if the title or sovereign bond is issued in Argentine pesos with adjustment clause or in foreign currency
    • The transfer of real estate by a local individual is taxed at a 15% of income tax rate
    • Interests of financial investments such as bank deposits, sovereign bonds, negotiable obligations, financial trusts and similar, issued in Argentine pesos without adjustment clause, are taxed at an income tax rate of 5%. The applicable tax rate is 15% when issued in Argentine pesos with adjustment clause or when issued in foreign currency
    • Dividends paid to a local individual are taxed at a 7% tax rate for fiscal year 2019 and 13% as of fiscal year 2020

    Foreign

    In general non resident entities and individuals are taxed at an income tax rate of 35% applied on the presumption of taxable income with effective tax rates of 12.5% up to 31.5% (see Taxable Incomes). Some concepts are not taxed at the general 35% tax rate and are taxed to an specific tax rate.

    • Transfer of sovereign bonds or any title (public or private) is taxed at a 5% income tax rate if the title is issued in Argentine pesos, or 15% income tax rate if the title is issued in Argentine pesos with adjustment clause, or in foreign currency. The transfer of shares of a local corporation is taxed at a 15% income tax rate. This assumes that the foreign beneficiary is in a jurisdiction considered as cooperative for tax purposes
    • Interests of financial investments such as bank deposits, sovereign bonds, negotiable obligations, financial trusts and similar, issued in Argentine pesos without adjustment clause are taxed at an income tax rate of 5%. The applicable tax rate is 15% when issued in Argentine pesos with adjustment clause or when issued in foreign currency. This provided that the foreign beneficiary is in a jurisdiction considered as cooperative for tax purposes
    • Dividends paid to a non resident individual or entity are taxed at a 7% tax rate for fiscal year 2019 and 13% as of fiscal year 2020

    The applicable tax rates can be lower if a double taxation treaty is applicable.

  • Tax compliance

    Local entities and individuals are obliged to fill tax returns at federal, state and municipal level depending on their activities. Tax returns mas be filled on monthly or yearly bases depending on the tax.

    Information regimes are applicable to certain activities.

    Advance payment regimes are applicable for some taxes.

  • Alternative minimum tax

    Not applicable for this jurisdiction.

  • Tax holidays, rulings and incentives

    Tax holidays

    Not applicable for this jurisdiction.

    Tax rulings 

    In some cases, taxpayers are entitled to present to the tax authorities a request for a ruling on a specific case. The ruling is binding for the consultant. 

    Tax incentives

    There are tax incentives at the federal, state and municipal level which target specific activities such as renewables and software services and development.

  • Consolidation

    Not applicable for this jurisdiction.

  • Participation exemption

    Argentina tax legislation does not provide for a participation exemption.

    Dividends paid by a local entity to another local entity are exempt from income tax. Dividends are only taxed when distributed to a local individual or to a foreign entity or individual.

  • Capital gain

    Capital gains are taxed by the income tax.

    Domestic and foreign, see Taxable income and Tax rates.

    Income tax or indirect transfer

    Income tax on indirect transfer may apply if a non resident entity is transferred provided that at least 30% of value of the entity is represented by assets located in Argentina and provided that the transferor owns at least 10% of the capital of such entity. When the transfer is carried on intragroup the income tax on indirect transfer is not applicable.

  • Distributions

    Distributions are taxed as dividends. Regardless of the tax residence of the recipient, dividends are taxed at a 7% tax rate for fiscal year 2019 and 13% as of fiscal year 2020.

    Domestic and foreign, see Taxable income and Tax rates.

  • Loss utilization

    Losses can be carried forward and can be offset with future profits for a five-year period.

    Losses considered to be of Argentine source can be offset only with profits considered to be of Argentine source. Losses considered to be of foreign source can only be offset of foreign source profits.

  • Tax-free reorganizations

    In Argentina it is possible to carry on an intragroup reorganization with no tax effects. Mergers, spinoffs or partial spinoffs are exempted from income tax, VAT and turnover tax if certain requirements are met.

    Income tax on indirect transfers can also be carried on with no tax costs if it is an intragroup transfer.

  • Anti-deferral rules

    According to CFC rules, the profits of a foreign entity directly or indirectly owned by a local entity or individual should be declared and taxed in the fiscal year of accrual in the following cases.

    • Trusts: When the trust is revocable, when the settlor is also the beneficiary, or when the resident individual or entity has full control of the trust
    • When the foreign entity is not considered a tax resident of the jurisdiction where it is incorporated
    • When:
      • The local individual or entity directly or indirectly owns at least 50% of the capital of the foreign entity
      • The foreign entity does not have sufficient structure to carry on its business or when at least 50% of the profits of the foreign entity are passive income
      • The taxes paid by the foreign entity in the country where it is incorporated are less than the 25% of the income tax that would be payable in Argentina (this requirement is deemed as occurred if the entity is incorporated in a non-cooperative jurisdiction)
  • Foreign tax credits

    Subject to conditions and limitations, foreign tax credits are available for foreign income taxes paid.

  • Special rules applicable to real property

    Domestic and foreign

    When a local entity or a non resident individual or entity sells or transfers real estate property located in Argentina, income tax is triggered.

    For resident individuals, if the real estate property that is being transferred has been acquired by the seller before January 1, 2018, no income tax is applicable, and the local individual must pay a special tax on transfer of real estate property. 

    There is the possibility of a tax deferral on the income tax applicable to the sale of a real estate property using a sale and replacement mechanism.

  • Transfer pricing

    Argentine transfer pricing rules apply to transactions between an Argentine party and a foreign related entity or any entity domiciled in a tax haven jurisdiction, a jurisdiction considered as non-cooperative, or that is subject to a privileged tax regime.

    Argentine transfer pricing rules follow arm's-length rule and follow the OECD guidelines with some divergences.

  • Withholding tax

    (see Taxable income and Tax rates.)

    Domestic

    Payments made by banks and financial institutions made to local entities or individuals in the case of interests on bank deposits or financial investments are subject to income tax withholding.

    Dividends paid by a local entity to a local individual are subject to income tax withholding. The tax rate applicable is 15%.

    Foreign

    Non resident entities or individuals are taxed on their income considered to be of Argentine source.

    The local payer is obliged to withhold the income tax at the time of the payment. Tax rates and presumptions of taxable income vary in connection with the type of payment made.

    Tax treaties may reduce or eliminate withholding of income tax.

  • Capital duty, stamp duty and transfer tax

    Capital gains are taxed by the income tax (see Taxable income and Tax rates.).

    Stamp duty or Stamp Tax is a provincial tax triggered by the entering of written agreements signed by both parties. The tax rate applicable varies in connection with the province and in connection with the agreement. Tax rates are of 0.2% up to 5% of the total amount of the agreement.

    There are legal mechanisms to avoid the payment of Stamp Tax by entering into an agreement as an offering letter.

    Transfers of shares, assets and real estate property are taxed under the income tax (see Taxable income and Tax rates.).

  • Employment taxes

    Employers must withhold income tax and social security contributions. Employers also must pay their share of social security contributions. These taxes are deductible by an employer for Argentine income tax purposes.

  • Other tax considerations

    Provincial taxes - Turnover tax

    Turnover tax or gross income tax is a tax collected by the provinces. The taxable event is the performance of commercial or industrial activity in the territory of the provinces. Tax rates can be 0.5% up to 6% in connection with the activity applied on the gross income. Some activities are charged with higher tax rates, such as online gambling which is taxed at a 15% tax rate in the Province of Buenos Aires.

    Every province has its own turnover tax. However, the turnover tax collected by each province are similar, although different tax treatments may result applicable for certain activities.

    Tax benefits

    For some activities there are special tax benefits at the federal level and provincial level.

    There are tax benefits for an investment in renewable energy, software production and services, investments in capital assets, biodiesel fuel and mining.

    The benefits may include partial or full exemptions, accelerated depreciation and drawback.

    VAT on the import of digital services

    Federal Government collects VAT on the importation of digital services. The taxpayer is the local resident unless the service provider has a fixed place in the Argentina. The tax rate is 21%.

    Double taxation treaties

    Argentina has signed tax treaties with Germany, Australia, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, United Arab Emirates, Spain, Finland, France, Italy, Mexico, Norway, Netherlands, United Kingdom, Russia, Sweden and Switzerland (all in force), and Turkey, China, and Qatar (signed but not yet in force).

  • Key contacts
    Augusto Nicolás Mancinelli
    Augusto Nicolás Mancinelli
    Of Counsel DLA Piper (Argentina) [email protected] T +5411 41145500 View bio
    Raúl Sanguinetti
    Raúl Sanguinetti
    Tax Partner Baker Tilly Argentina [email protected] T +54 (11) 5352 2400 View bio

Tax rates

Argentina

Domestic

Local entities are subject to an income tax rate of 30% for fiscal year 2019 and 25% as of fiscal year 2020.

In general, local individuals are taxed at a progressive tax rate that goes from 5% to 35%, except for earnings with a fixed tax rate. Those are the following:

  • For local individuals the transfer of sovereign bonds, or any title is taxed at a 5% income tax rate if the title is issued in Argentine pesos, or 15% income tax rate if a share of a corporation is transferred, or if the title or sovereign bond is issued in Argentine pesos with adjustment clause or in foreign currency
  • The transfer of real estate by a local individual is taxed at a 15% of income tax rate
  • Interests of financial investments such as bank deposits, sovereign bonds, negotiable obligations, financial trusts and similar, issued in Argentine pesos without adjustment clause, are taxed at an income tax rate of 5%. The applicable tax rate is 15% when issued in Argentine pesos with adjustment clause or when issued in foreign currency
  • Dividends paid to a local individual are taxed at a 7% tax rate for fiscal year 2019 and 13% as of fiscal year 2020

Foreign

In general non resident entities and individuals are taxed at an income tax rate of 35% applied on the presumption of taxable income with effective tax rates of 12.5% up to 31.5% (see Taxable Incomes). Some concepts are not taxed at the general 35% tax rate and are taxed to an specific tax rate.

  • Transfer of sovereign bonds or any title (public or private) is taxed at a 5% income tax rate if the title is issued in Argentine pesos, or 15% income tax rate if the title is issued in Argentine pesos with adjustment clause, or in foreign currency. The transfer of shares of a local corporation is taxed at a 15% income tax rate. This assumes that the foreign beneficiary is in a jurisdiction considered as cooperative for tax purposes
  • Interests of financial investments such as bank deposits, sovereign bonds, negotiable obligations, financial trusts and similar, issued in Argentine pesos without adjustment clause are taxed at an income tax rate of 5%. The applicable tax rate is 15% when issued in Argentine pesos with adjustment clause or when issued in foreign currency. This provided that the foreign beneficiary is in a jurisdiction considered as cooperative for tax purposes
  • Dividends paid to a non resident individual or entity are taxed at a 7% tax rate for fiscal year 2019 and 13% as of fiscal year 2020

The applicable tax rates can be lower if a double taxation treaty is applicable.

Australia

Both resident companies and non-resident companies (with Australian-sourced income) are subject to income tax at the company tax rate of 30%, unless they qualify for a lower rate (27.5% for the 2018-19 income year, 26% for the 2020-21 income year and 25% for later income years) by satisfying specific requirements (ie, having an aggregated turnover of less than AUD 50 million and satisfying an active income test).

Austria

Profits of corporate entities are taxed at the company level at a flat rate of 25% corporate income tax (Körperschaftsteuer). Payments where the recipient is not disclosed (Empfängerbenennung) may attract a 25% surcharge and are not tax deductible.

Belgium

Resident companies are subject to a standard corporate income tax rate of 29.58%. This rate will be reduced to 25% as from 2020. The first income band of €100,000 of small companies is subject to a lower rate of 20.40% (20% as from 2020).

Brazil

Canada

The federal corporate tax rate for 2019 is 15% on general active business income, and the combined federal and provincial corporate tax rates for 2019 range from 26.5% to 31% depending on the provinces in which the permanent establishments of a corporate taxpayer are located.

China

The standard enterprise income tax rate is 25%, with a few preferential tax rates applicable to qualified enterprises.

The standard withholding income tax rate for non-resident enterprises is 10%, which may be reduced by applicable tax treaties.

Colombia

33% for 2019

32% for 2020

31% for 2021

30% as of 202

Financial institutions that report a taxable income exceeding 120,000 UVT (in 2019 COP$4.1billion) are subject to the following tax rates:

37% for 2019

35% for 2020

34% for 2021

30% as of 2022

Finland

The corporate income tax rate is 20%.

France

Graduated income tax rates start at 15% with a top rate of 32.02% in 2019 (including additional contribution at the rate of 3.3%). For 2019, the standard corporate income tax rate is 28% to the extent of €500,000 and 31% for the portion exceeding the threshold, on top of which miscellaneous contributions may be added. The Finance Act for 2018 provided for a progressive reduction of corporation tax rates to 28% on January 1, 2020, applicable from the first euro, 26.5% on January 1, 2021 and 25% on January 1, 2022.

Germany

The corporate income tax rate is 15% plus 5.50% solidarity surcharge levied on the corporate income tax (ie, 15.825% including the solidary surcharge). 

The trade tax rate, which is levied by municipalities, varies, but in practice averages 14% to 17% of taxable income. Trade tax is based on taxable income as calculated for corporate income tax purposes. However, several income adjustments apply.

Hong Kong

Under the new two-tiered profits tax rate regime (effective from April 1, 2018), the profits tax rate for the first HK$2 million of profits of corporations will be lowered to 8.25%; profits above that amount will continue to be subject to the normal tax rate of 16.5%. The said rates apply on all assessable income with only few exceptions. The most significant one is the offshore fund profits tax exemption which exempts most profit of offshore funds carrying on business in Hong Kong.  Partial rate exemption (ie, 8.25%) applies to items of income such as income from qualifying debt instruments issued in Hong Kong or the offshore business income of professional reinsurance companies or profits from contract manufacturing on the mainland. In addition, qualifying corporate treasury centers may enjoy a 50% concession (ie, 8.25%) on the prevailing rate of normal Hong Kong profits tax (ie, 16.5%) on the qualifying profits.

India

Income tax rates applicable to an individual taxpayer range from a rate of 0% to 30%. Surcharge of 10% is payable if the income of the individual taxpayer is between INR5,000,000 (Rs. 5 million) to INR10,000,000 (Rs. 10 million) and surcharge of 15% is payable if the income of the individual taxpayer exceeds INR10,000,000 (Rs. 10 million). The income tax rate for domestic companies is 25% if turnover or gross receipt of the company does not exceed INR2,500,000, 000 (Rs. 2.5 billion) in the Financial Year 2018-19. A surcharge of 7% is payable if the income of the domestic company exceeds INR10,000,000 (Rs. 10 million) but does not exceed INR100,000,000 (Rs. 100 million). A surcharge of 12% is payable if the income of the domestic company exceeds INR100,000,000 (Rs. 100 million). Over and above the income tax and surcharge, health and education cess is payable at the rate of 4% of the income tax and surcharge by all taxpayers.

Ireland

Corporate tax is applied at two rates, 12.5% for trading income and 25% for non-trading (passive) income.

Israel

Both ordinary income and real capital gains of a corporation are subject to a flat tax rate of 23%.

These rates might be significantly reduced if the corporation is entitled to one of the incentive regimes discussed under Tax incentives.

Italy

The IRES standard rate equals 24%. Specific surcharges are applied to specific sectors.

Japan

For corporate tax, the basic national corporate tax rate is 23.2% for taxable years commencing from April 1, 2018 or later. Corporations are also subject to local taxes, which increase the standard effective tax rate to 30.62% (if the office is located in Tokyo). Since April 2016, the amended Corporation Tax Act has come into force, and corporate tax on a foreign corporation with a permanent establishment in Japan is imposed on its income attributable to the permanent establishment in Japan. According to the 2019 Japan tax reform outline, the applicable period for the reduction of corporate income tax rate (which is 15% of  income equal to or less than 8 million yen per annum) for small and medium enterprises will be extended by two years

Luxembourg

As of January 1, 2019, the corporate income tax (CIT) rate has been reduced to 17%, leading to an overall tax rate for companies of 24.94 in Luxembourg City (taking into account the solidarity surtax of 7% and including 6.75% municipal business tax rate applicable and which may vary depending on the seat of the company). This measure was planned in order to strengthen the competiveness of companies.

Mexico

The corporate income tax rate is 30%, and for individuals it is progressive up to a 35% rate.

There is also a Value Added Tax (VAT) of 16% on transfers of goods, rendering of independent services, leasing of goods, and importation of goods or services into Mexico.

Further, there is an excise that intends to reduce consumption of harmful products (ie tobacco, alcohol, pesticides, etc) and limit the use of resources (ie gasoline, energy, etc).

Based on a special Presidential Decree published on December 31, 2018, tax incentives are available for tax residents of the Mexican border region, for years 2019 and 2020. These incentives include tax credits through which the corporate income tax rate would be reduced from 30% to 20%, and the VAT rate would be reduced to 8%. In order to apply the benefits of the Decree, qualified legal entities, individuals and branches of foreign entities must comply with specific requirements and formalities.

Netherlands

The standard corporate income tax rate is 25%. A lower rate of 20% applies for taxable income up to €200.000.

The Netherlands only levy withholding tax up to 15% on outgoing dividends, often reduced under the application of tax treaties or a domestic withholding exemption. There are no withholding taxes on payment of interest and royalties.

Norway

The corporate tax rate is 22% (2019).

Poland

The corporate income tax (CIT) rate is 19% or 9% for so called small taxpayers (ie, entities with sales revenue, including output VAT, for the previous year not exceeding EUR 1.2 million and first year taxpayers who just started business activity).

Portugal

The general corporate income tax rate is 21%. A reduced tax rate of 17% applies to the first EUR 15,000 of taxable profits of small and medium-sized enterprises.

A state surcharge is levied on taxable profits at the following rates: 3% for profits over EUR 1.5 million up EUR 7.5 million; 5% on profits over EUR 7.5 million up to EUR 35 million and 9% on profits exceeding EUR 35 million.

A municipal surcharge is levied on taxable profits on rates up to 1.5%, depending on the municipality.

Romania

Romanian legal entities can be subject of one of the following tax systems:

Corporate income tax regime

Romanian tax resident entities and local permanent establishments of foreign entities are subject to 16% tax on their profits, computed/allocated as described above.

Micro-enterprise tax regime

Newly incorporated legal entities and companies that have a turnover lower than the RON equivalent of EUR 1,000,000 are obliged to apply the micro-enterprise taxation unless specific criteria regarding the share capital and the number of employees are not met. The micro-enterprise tax applies to revenues derived by the entity and is 1% for entities that have at least one employee, and 3% for entities that have no employees.

Specific tax system for certain industries

Entities that operate in the hospitality industry are obliged to apply a specific taxation regime that is based on the business capacity and not on the level of the profits derived from their activity.

Russia

The general corporate profits tax rate is a flat rate of 20%.

Singapore

The current prevailing rate of corporate income tax is 17%. Partial exemptions are available in respect of the first S$300,000 of chargeable income, as follows:

YA 2019 YA 2020
Chargeable income Exemption available Exempt amount (S$) Chargeable income Exemption available Exempt amount (S$)
First S$10,000 75% exempt 7,500 First S$10,000 75% exempt 7,500
Next S$290,000 50% exempt 145,000 Next S$290,000 50% exempt 95,000
Total exempt amount   152,500 Total exempt amount   102,500

Full tax exemption on the first S$100,000 of normal chargeable income and a further 50% exemption on the next S$200,000 of normal chargeable income is available to new startup companies for YA 2019, subject to certain conditions.  For YA 2020, the 50% tax exemption will apply only to the next S$100,000 of normal chargeable income.

In addition, a 20% corporate income tax rebate (capped at S$10,000) is available to all companies for YA 2019.

South Africa

The tax rate  for resident and foreign corporate entities is 28%.

South Korea

The basic rate on corporate income tax starts at 10% with a top rate of 25%. Corporate local income tax equivalent to approximately 10% of the corporate tax is also imposed.

Spain

The general corporate income tax rate is 25%. Reduced tax rates of 20%, 15%, 10% and 1% are applied to certain corporations.

Sweden

The corporate income tax rate is 21.4 % (2019 and 2020) and then further reduced to 20.6% (2021 and onwards).

Switzerland

Federal corporate income tax is levied at a flat rate of 8.50% on profits after tax (ie, about 7.83% on profit before tax).

In addition, each canton has its own tax laws and levies cantonal and municipal  corporate income taxes, generally imposed at flat rates.

As a general rule, the combined effective federal, cantonal and communal corporate income tax rate currently varies between 12% to 25% on profits before tax (depending on the canton and municipality).

For associations, foundations and other legal entities as well as collective investment vehicles lower rates might apply.

Equity tax is levied on a cantonal and communal level. The tax rates currently vary from 0.001% to 0.60%. On a federal level, no equity tax is levied.

Taiwan

Income tax is assessed at a rate of 20% and the threshold for subjecting a Taiwan company to corporate income tax is NT$120,000.00 per annum.

Turkey

Standard corporate tax rate is 20%. It is calculated based on the fiscal profits on an annual basis.

Ukraine

Corporate income tax rate is 18%. Lower tax rates are applicable to income from insurance and gambling activities.

United Arab Emirates

Oil and gas producing companies pay tax in the form of royalties as per specific government concession agreements, which are confidential.

Branches of foreign banks are subject to income tax at a rate of 20%.

United Kingdom

The standard corporation tax rate is 19%. It is proposed that this will be reduced to 17% with effect from April 1, 2020.

United States

Flat federal corporate income tax rate of 21%. State and local taxes also may apply.

Zimbabwe

Tax rates differ based on the entity being taxed and are subject to change at the beginning of each tax year.