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Every country has their own tax system and code by which individuals and corporations must abide. The tax policy of individual countries is one of the main determining factors for whether it is considered viable for businesses and friendly to foreigners doing business in or relocating to that country. Let’s take a look at Argentina’s tax overview in three main categories: Personal Taxes, Corporate Taxes, and VAT Taxes.
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Argentina Personal Taxes
Here’s everything you need to know about personal taxes in Argentina:
Who is Taxed?
Argentina levies two different taxes on individuals, including personal income tax and personal assets tax (also known as a wealth tax). Any person who earns income in Argentina is subject to the country’s income tax.
A person is considered a resident if they live permanently in the country or if they are a foreign individual who stays in the country for a period of 12 months.
What is the Tax Rate?
Argentina has a progressive income tax rate. There are seven scales for the income tax that range between 5% and 35%. The individual tax rates in Latin America had an average of 31.89% in 2021. That means that some individuals pay on the higher end of income tax rates in Argentina compared to the rest of Latin America, while others pay less.
In addition to the income tax, Argentina also assesses a personal assets tax, or a wealth tax. On average, this wealth tax is 1.25% on the taxable base. It is assessed on:
- Assets that belong to residents of Argentina, whether located either in Argentina or in other countries
- Assets in Argentina that belong to an individual residing in a foreign country
- Shares that are issued by an Argentine company—though the company typically pays this tax on behalf of the shareholder
National vs International Income
Residents of the country are taxed on all income they earn worldwide. Non-residents are only taxed on the income they earn in Argentina.
Capital Gains, Exemptions & Other Considerations
Argentina doesn’t subject capital gains to tax. There is a 1.5% real estate tax, however, that is charged when individuals sell a property—whether there is a profit or loss from that sale.
The country does allow deductions for medical expenses, retirement annuities, mortgage interest, some donations and other areas.
Argentina Corporate Taxes
Here’s everything you need to know about corporate taxes in Argentina:
Who is Taxed?
Argentina taxes all companies that have a presence in the country or are considered residents of the country. Resident companies are taxed on all the income they generate, regardless of whether it’s sourced there or in another country. Non-resident businesses are subjected to corporate tax only on the income they generate in Argentina.
Argentina also taxes income from goods that are exported from Argentina. The country also taxes other international business activities, such as films produced in another country, international transportation, insurance, etc.
What is the Tax Rate?
Argentina charges corporations a tax rate of 35%. This rate is much higher than some of its neighboring countries. In fact, in 2020, the average corporate tax rate in South America was 27.54%. This puts Argentina nearly 10 percentage points higher.
For partnerships, Argentina charges each individual who is part of the partnership. They are charged on a tax scale that is progressive, between 9% and 35%.
What is Taxable Income?
Argentina defines taxable income as any profits that are generated by the company.
Tax Incentives & Deductions
Generally speaking, Argentina allows companies to deduct expenses that are necessary to generate the profit. Argentine businesses also receive a tax credit for any foreign income tax that they pay.
Argentina also offers tax incentives for activities such as forestry, mining, software production and biotechnology. The country also has a tax-free zone called Tierra del Fuego.
Argentina VAT Taxes
Value-added taxes, better known as VAT taxes, are a common form of consumption tax. The value-added portion is the difference between a business’ sales and its cost of purchasing services or goods from another business. Here’s what you need to know about VAT taxes in Argentina:
Who is Taxed?
Argentina assesses VAT taxes on goods and services that originate in the country. They assess this tax on a monthly basis, and consider the “inception” of the event at whatever is earliest—the delivery of goods, the rendering of the service, the issuance of the invoice, or the receipt.
What is the Tax Rate?
Argentina has a standard VAT tax rate of 21%. This is charged on the transaction’s net price. This VAT tax is one of the highest that’s charged in Latin America. That said, some goods and services are charged a lower 10.5% rate, and Argentina does not apply a VAT tax at all to exports.
Services and leases that are charged a 27% VAT tax include:
- Telecommunications
- Electricity
Goods and services that are charged a 10.5% VAT tax include:
- Fresh vegetables
- Interests on loans from financial institutions in Argentina
- Lodgings
- Bovine meat
- Newspapers and magazines
- Transportation for individuals
Is Argentina Right for Your Business?
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