Corporate - Income determinationLast reviewed - 22 February 2023
Inventory valuation is based on the latest purchase. Thus, the last in first out (LIFO) method may not be elected for tax purposes. Conformity between book and tax reporting is not required.
Capital gains and losses attract normal CIT treatment, except that losses from the sale of shares, equity interests, bonds, and similar securities may be offset only against the same type of income.
Capital gains on equity
Gains derived from the transfer of shares, bonds, and other securities are subject to tax at regular CIT rates (25% to 35%).
Non-residents are subject to capital gains tax on the disposal of Argentine equities at a 13.5% effective tax rate on gross proceeds or, alternatively, a 15% income tax on the actual capital gain if the seller’s tax cost basis can be duly documented for Argentine tax purposes. Disposal of equities listed in the local stock exchange and American Depository Receipts (ADRs)/Global Depository Receipts (GDRs) are tax exempt, provided certain conditions are met.
Capital gains on debts
Capital gains derived by foreign beneficiaries from the sale of corporate bonds placed by public offer (obligaciones negociables), notes issued by financial trusts (títulos de deuda), or government bonds should be exempt from profits tax, provided certain conditions are met.
Dividends, including stock dividends, are not included in the tax base by the recipient if distributed by an Argentine company (see the Withholding taxes section for additional information). However, tax is levied if the dividends are distributed by a foreign company.
Royalty income should be included as part of the taxpayer’s taxable income and will be subject to the standard CIT rates.
Foreign exchange gains/losses
The general rule is that foreign exchange results (gain or losses) have to be recognised on an accrual basis. However, in some cases, the cash basis is applicable.
Foreign exchange losses arising from inter-company financing are subject to thin capitalisation rules.
Foreign income received or held undistributed abroad (in case of investments in non-stock companies) by resident corporations is subject to tax. Note that an Argentine taxpayer is immediately taxed on the passive income generated by a controlled foreign company (CFC) that is directly or indirectly held by the Argentine taxpayer to the extent that more than 50% of that CFC’s income is passive and is effectively subject to a tax that is lower than 75% of the applicable Argentine income tax rate. Tax losses from a foreign source can only be offset against income from a foreign source.