Argentina Corporate Tax Rate and Other Business Taxes

Operating a business in Argentina requires navigating a system of national, provincial, and local taxes. For any entity operating in the country, a clear grasp of corporate tax obligations is necessary for financial planning and compliance.

Corporate Income Tax Calculation

Argentina employs a progressive corporate income tax (CIT) system for resident companies and domestic branches of foreign entities. For fiscal years starting on or after January 1, 2023, taxable income is assessed in brackets. Net income up to 34,703,523.08 Argentine pesos (ARS) is taxed at 25%. Income between ARS 34,703,523.08 and ARS 347,035,230.79 is subject to a fixed amount of ARS 8,675,880.77 plus a 30% rate on the excess. Taxable income surpassing ARS 347,035,230.79 is taxed at ARS 102,375,393.08 plus a 35% rate on the excess amount.

The tax base for resident corporations includes their worldwide income. To prevent double taxation, companies can claim a tax credit for similar income taxes paid in other countries on their foreign-source income. In contrast, non-resident entities, such as branches of foreign companies, are taxed only on income from Argentine sources. Capital gains are generally treated as regular income and included in the taxable base.

Taxable income is determined by adjusting accounting profits according to tax law. Businesses can generally deduct expenses necessary for producing income, including employee salaries, social security contributions, and interest on loans. Depreciation of assets, based on the asset’s expected useful life, is also a common deduction. However, certain expenditures are explicitly non-deductible, which increases the final taxable income.

Argentina’s system includes an integral inflation adjustment mechanism. This procedure requires companies to adjust the historical cost of certain assets and liabilities for inflation when calculating their income tax liability. This adjustment aims to measure real profits more accurately in a high-inflation environment, preventing the taxation of nominal gains. The adjustment is mandatory when the Consumer Price Index (CPI) variation exceeds specific thresholds over a three-year period.

Other Significant Business Taxes

Value Added Tax

Corporations face a Value Added Tax (VAT), or IVA, a broad consumption tax on the sale of goods, provision of services, and imports. The standard VAT rate is 21%. Different rates apply to certain items, including a reduced 10.5% rate for some capital goods and an increased 27% rate for utilities and telecommunications services.

Turnover Tax

The Turnover Tax is a provincial-level gross receipts tax levied on gross revenues from business activities. Rates vary by province and the type of business activity. The tax has a cascading nature; it is applied at each stage of production and distribution without a credit mechanism for taxes paid in previous stages. This can lead to the tax being embedded multiple times in the final price.

Tax on Bank Debits and Credits

A federal tax is imposed on financial transactions, specifically on debits and credits in bank current accounts at a rate of 0.6%. A portion of this tax can be credited against other federal tax liabilities. Specifically, 33% of the tax paid on both debits and credits can be used as a payment toward the final corporate income tax liability.

Withholding Taxes on Payments

Corporations in Argentina have withholding tax obligations on payments like profit distributions. A 7% withholding tax is applied to dividends paid out to resident individuals and non-resident shareholders. This same 7% rate applies to profit remittances made by an Argentine branch to its foreign head office.

Payments from an Argentine company to a foreign beneficiary for services or rights are also subject to withholding at the source. Rates depend on the nature of the payment. For instance, interest payments to foreign entities are generally subject to a withholding tax with a standard rate as high as 35%. Royalties for patents or copyrights and fees for foreign technical assistance also trigger withholding requirements at varying rates. These taxes are considered a final settlement of the Argentine tax liability for the non-resident recipient.