Key Amendments in Argentina’s Corporate Income Tax Law

First, Law No. 27,630 amends the first paragraph of article 73 of the Argentine Income Tax Law (as amended, the “ITL”) and replaces the fixed rate paid by Argentine companies on their corporate income from 30% to a progressive rate ranging from 25% to 35%.

Depending on net incomes, companies will now have to pay a fixed amount and a progressive rate over the surplus of the minimum base rate in their category. The following scale applies to tax periods starting January 1, 2021:

These amounts will be adjusted once a year starting January 1, 2022. To that effect, the annual variation of the Consumer Price Index (“IPC,” after its acronyms in Spanish) stipulated by the National Institute of Statistics and Census (“INDEC,” after its acronyms in Spanish) will be computed. 

Likewise, permanent establishments located in Argentina owned by foreign residents and regulated under article 22 of the ITL will also be taxed with this progressive rate as outlined above.

The applicable rate over profits and dividends paid to shareholders, whether they are individuals or undivided estates residing in Argentina or foreign residents, will continue to be 7% in all cases, regardless of the tax rate paid by the company at the corporate level.

When a permanent establishment remits profits to its head office, it will have to pay an additional rate of 7%.

In addition, Law No. 27,630 amends article 20 of the ITL and establishes that any jurisdictions, territories or special regimes in which the maximum corporate income tax rate is lower than 60% of the “minimum” corporate income tax rate contemplated in the scale in article 73 of the LIG (which is 25%) will be considered as a low or no-tax jurisdiction. Thus, to determine that a jurisdiction is low or no-tax, the current >15% standard rate (i.e., 60% of 25%) is maintained.

Likewise, Law No. 27,630 adds that the provisions of this new law do not modify the tax treatment stipulated in the second paragraph of article 73 of the ITL for income derived from the exploitation of games of chance in casinos (roulette, point and bank, blackjack, poker and/or any other authorized game) and from the placing of bets through electronic gaming machines and/or automated betting machines (with or without immediate resolution) and/or through digital platforms, which continues to be 41.50% in all cases.

Finally, Law 27,630 also modifies the fixed amount that companies can deduct for fees paid to directors, supervisory board members and/or managing partners (article 91 paragraph i) of the LIG), currently set at ARS $ 12,500, establishing that such amount may be increased by 40% when the recipient of those fees is a woman and by 60% in the case of transvestites, transsexuals and transgender persons.

The amendments incorporated by Law NO. 27,630, as we mentioned before, will apply for tax periods starting January 1, 2021.