Argentina

Individual - Significant developments

Last reviewed - 28 January 2021

Changes on Income tax

On April 21, 2021, Law No. 27,617 was published in the Official Gazette amending Argentina’s Income Tax Law and incorporating significant changes with impact in individual taxation, including registered employees, retired individuals, and pensioners. 

 

The law established the increase in the special deduction for the income tax calculation so that the tax only reaches individuals with monthly gross salary higher than AR$ 150,000. For those individuals whose monthly gross remuneration is between AR$150.001 and AR$ 173.000, the law contemplated an additional special deduction. Moreover, the 13th salary will be exempt from tax when the gross salary is below AR$ 150,000.

 

The amendment also contemplates an increase in the special deduction for children and disabled children and it also incorporates a tax deduction for cohabiting partner even if the couple is not legally married. In the same way, health personnel are exempted from income tax on overtime extra payment or shifts until September 2021 (regulation related to the pandemic).

 

Other changes include an exemption for day care and maternal and kindergarten expenses corresponding to dependent children and stepchildren, stepsons and stepdaughters up to 3 years of age as well as the provision of educational tools and the payment of training or specialization courses for employee´s children and stepchildren as long as it is paid by the employer, duly supported by the corresponding invoices and in case of training up to 40% of the non-taxable income deduction.

 

In addition, training or specialization courses or seminars are exempt from income tax as long as they are essential for the performance and development of the employee's career in the company and they are paid by the employer; and  performance bonus, shortfall allowances or similar compensation are also exempt from income tax only if the employee monthly salary is below AR$300.000. These exemptions should not exceed 40% of the individual’s non-taxable income.

Solidarity and extraordinary contribution to people's wealth

A new tax under the name of 'Solidarity and extraordinary contribution to people's wealth' has been published under Law N° 27.605 on 18 December 2020. However, the regulatory decree has not been issued yet. This tax will affect those individuals whose worldwide assets are valued at 200 million Argentine pesos (ARS) and over at that date. The tax due will depend on the total asset value, as a progressive scale is in place; however, the minimum tax due will be ARS 4 million. The tax rates vary from  3% to 5.25% applicable to foreign located assets and 2% to 3.5% applicable to Argentine located assets.

This tax is complementary to the wealth tax that already exists.

Scale for assets located in Argentina:

Total assets value (ARS) Will pay (ARS) Plus Over the excess of (ARS)
More than To (inclusive)
0  300,000,000  0 2.00% 0
 300,000,000  400,000,000  6,000,000 2.25%  300,000,000
 400,000,000  600,000,000  8,250,000 2.50%  400,000,000
 600,000,000  800,000,000  13,250,000 2.75%  600,000,000
 800,000,000  1,500,000,000  18,750,000 3.00%  800,000,000
 1,500,000,000  3,000,000,000  39,750,000 3.25%  1,500,000,000
 3,000,000,000 and on  88,500,000 3.50%  3,000,000,000

Scale for assets located abroad:

Total assets value in Argentina and abroad (ARS) Will pay over assets abroad
More than To (inclusive)
 200,000,000  300,000,000 3.00%
 300,000,000  400,000,000 3.38%
 400,000,000  600,000,000 3.75%
 600,000,000  800,000,000 4.13%
 800,000,000  1,500,000,000 4.50%
 1,500,000,000  3,000,000,000 4.88%
 3,000,000,000 and on 5.25%

Digitalisation of tax-related procedures

Continuing with the plan of modernisation in the tax administration, the Federal Tax Authority (AFIP) has issued a series of measures aiming at the digitalisation of certain tax procedures.

Electronic domicile for federal tax purposes

On 24 July 2018, the AFIP issued General Resolution n° 4280/2018 formally establishing the obligation of using a special electronic domicile for all taxpayers.

As of the enactment of the Resolution, taxpayers will no longer receive paper-based notifications from the AFIP. Instead, formal communications will be posted on an online system to be accessed by the taxpayer with the use of its fiscal code. Communications will be deemed to be notified as of its visualisation through the system or, alternatively, on every Monday, regardless of whether the communication was accessed or not by the taxpayer.

Electronic registration for new taxpayers

As of 17 October 2018, new taxpayers can elect to be registered with the AFIP using a web-based process. General Resolution 4320/2018 established an electronic procedure to obtain a tax ID for new taxpayers that already have the latest version of the Argentine ID.

Value-added tax (VAT) on services performed by non-residents in Argentina in absence of a permanent establishment (PE)

On 11 December 2018, the AFIP issued General Resolution 4356/2018 by means of which long-awaited guidance on the application of VAT on the render of services performed by non-residents within the Argentine territory (in absence of a PE) was issued. Although this taxable event was introduced in Argentine legislation by Law 27,346 (published in the Official Gazette on 27 December 2016), the tax was not applicable due to lack of a specific mechanism to remit the taxes to the authorities.

VAT on taxable events that occurred as of 12 September 2018 is to be paid by the Argentine service recipient on a reverse-charge mechanism within ten working days of occurrence. This tax paid can be considered as input VAT (to offset output VAT on taxable sales or render of services in the domestic market) by such service recipient in the monthly tax return corresponding to the month it was effectively paid.

Modifications in tax on personal assets (wealth tax)

On 21 December 2018, Law 27,480 was published in the Official Gazette introducing amendments to tax rates and exempt minimums for wealth tax. As of fiscal year 2019, the exempt minimum will rise from ARS 1,050,000 to ARS 2,000,000, being of application the following tax rates:

Taxable assets (ARS) Tax on column 1 (ARS) Tax on excess (%)
Over (column 1) Up to
0 3,000,000 - 0.25
3,000,000 18,000,000 7,500 0.50
18,000,000 and over 82,500 0.75

Remission of employees' annual wage tax return by employers

On 2 January 2019, the AFIP issued General Resolution 4396/2018 establishing the obligation for Argentine employers to electronically remit the employees' annual wage tax return, informing the annual employee's compensation, deductions, and withholdings performed for each fiscal year. Formerly, employers were only required to remit this information to employees but not to the AFIP.

This obligation is applicable as of the annual wage return corresponding to fiscal year 2018, and the due date for the remission will be the last day of April of the following year that is informed. This information will also be available to employees through the AFIP's website.