The rate of profits tax on net taxable business profits has been reduced to 30% (formerly 35%) for fiscal years beginning on or after 1 January 2018. Such rate will be further reduced to 25% for fiscal years beginning on or after 1 January 2020. Legal entities resident in Argentina are subject to tax on Argentine and foreign-source income. Resident legal entities are able to claim any similar taxes actually paid abroad on foreign-source income as a tax credit. The tax rate applies on net income determined on a worldwide basis.
The 2017 tax reform also introduced a WHT on dividend distributions and branch profit remittances at rates of 7% (while the applicable profits tax rate is at 30%) and 13%, respectively, going forward.
The 2017 tax reform has also abolished the so-called ‘equalisation tax’ for profits generated in taxable years starting on or after 1 January 2018. The equalisation tax was a WHT levied at a 35% rate on dividend distributions in excess of tax earnings. The equalisation tax, however, remains applicable on dividend and branch profit distributions made out of earnings accumulated prior to 1 January 2018 and which were in excess of tax earnings as of the year-end prior to the relevant distribution.
Argentine-source income (e.g. royalties, interests) received by foreign entities is subject to WHT in full and final settlement at source (see the Withholding taxes section).
Tax on minimum notional income
In addition to the profits tax, there is a tax on minimum notional income. The rate is 1% on the value of fixed and current assets. The presumed tax, imposed annually, is applied only in excess of the profits tax of the same fiscal year. In addition, payment of this presumed tax, not offset by the profits tax, will be treated as payment on account of profits tax chargeable during a maximum period of ten years.
Banking and insurance entities are only subject to this tax on 20% of the corresponding taxable assets.
This tax will be repealed as of 2019.
Local income taxes
For a description of the local (jurisdictional) tax on gross revenues from the sale of goods and services, see Turnover tax in the Other taxes section.