Argentina

Market overview

The past year has been a tough one for Argentina economically. With high inflation rates acting as a hidden tax, many companies are struggling and foreign investors see Argentina as a risky country to invest in because of the economic instability. While practitioners are optimistic that positive changes will soon happen and that better times lie ahead, the new government has a lot to clear up before Argentina's economy is on stable ground.

The tax authorities are reportedly being more relaxed on audits in general, however certain sectors of the economy are being put under the microscope, facing an increasing amount of aggressive audits. The commodities sector in particular has been targeted this year, according to Deloitte. However, the sector has seen positive changes too, with the new government removing export taxes on minerals, including on gold and silver.

The OECD's BEPS programme, which is a major talking point in many other jurisdictions, is not such a pressing concern in Argentina. The country is an observer of the programme, but nothing has yet been formally assessed in terms of legislation. While Argentina wants to become a member of the OECD, and is following certain processes such as Action 13 on country-by-country reporting (CbCR), the country is already following the principle of substance over form, which is very similar to the measures in the BEPS programme.

"There is no need to implement many of the BEPS measures here because Argentina is following the principle of substance over form which already covers many of the issues addressed by BEPS," said Martin Barreiro, head of tax at Baker & McKenzie. "Argentine courts have been applying as interpretation tools all the measures adopted by the OECD which were relevant for the cases handled by them in Argentina," he added.


Tax authorities

Administración Federal de Ingresos Públicos (AFIP)
Hipólito Yrigoyen 370, C1086ADD, Buenos Aires, 1086
Tel: +54 0810-999-2347
Website: www.afip.gob.ar


Tax rates at a glance

(As of April 2016)

Corporate income tax rate 35% (a)
Capital gains tax rate 15/35% (b)
Branch tax rate 35% (a)
 
Withholding tax
Dividends 10/41.5% (c)
Interest 15.05/35% (d)
Royalties from patents, know-how, etc. 21/28/31.5% (d)
 
Net operating losses (years)
Carryback 0
Carryforward 5

  1. A tax on minimum presumed income is payable to the extent it exceeds regular corporate income tax for the year.
  2. The 15% rate applies to capital gains derived by foreign residents from sales of shares, quotas, and other participations in entities, titles, bonds and other securities. Similar treatment is granted to Argentine individuals. Argentine corporate residents are subject to the regular 35% corporate rate.
  3. The 10% dividend withholding tax is calculated on after-tax dividend distributions. However, if the amount of a dividend distribution or a profit remittance exceeds the after-tax accumulated taxable income of the taxpayer, a separate final withholding tax of 35% may be imposed on the excess, regardless of the application of the general 10% withholding tax, thereby resulting in an effective rate of 41.5%.
  4. These are final withholding taxes imposed on non-residents only.

Source: EY 2016 Worldwide Corporate Tax Guide


Firm contact details

Luna Requena & Fernández Borzese Abogados (WTS Argentina)