Taxes in Argentina: Which taxes should we pay?

Argentina, land of mate, tango and Argentinian barbecue (and Messi, of course), is a very pleasant country to live in, with its diverse landscapes, friendly people, tasty cuisine and vibrant cities, such as cosmopolitan Buenos Aires, attractive Cordoba and tidy Mendoza. Hence, many remote workers and digital nomads decide to move for good or spend a few months touring the beauties of the country. For this group, having an income in dollars or other hard currency makes the cost of living very affordable. On the other hand, it’s no news that Argentina is constantly facing economic and social crises, or that inflation is one of the highest in the region. Knowing this, you may be wondering about taxes in Argentina. Are they high? What exactly are the taxes to be paid and how much does each one represent?

In this article, we’ll guide you through the main taxes in Argentina, their rates and some practical examples that’ll help you understand how to comply with your tax obligations, especially if you’ve just moved to the country. Join us to clear up all your doubts on this subject!

Are taxes high in Argentina?

Argentina is a country with a complex and extensive tax system that impacts both individuals and businesses and includes taxes at the national, provincial and municipal levels. Understanding how this works is key, as from the taxes we pay on our everyday purchases to those that apply to our income or property, each contribution has its own purpose and its own process. 

Now, what about taxes? While they may vary, taxes in Argentina tend to be high compared to other Latin American countries. This is due to several factors, including a tax structure that combines national, provincial and municipal contributions, as well as high taxes in some cases. For example, income tax has a rate of 35%, while countries such as Chile and Peru have rates ranging from 25 to 30%. Another clear example is the Value Added Tax. In Argentina, VAT is 21% (one of the highest in the region), while in Mexico it’s 16%, and in neighbouring Paraguay the rate is only 10%.

Although Argentina’s tax system aims to cover high public expenditures, this tax burden also creates challenges, especially for entrepreneurs and businesses whose profitability is affected. Therefore, compared to other Latin American countries, Argentina is perceived as a country with a high and complex tax burden, which may influence competitiveness and investment decisions.

Taxes in Argentina for individuals or natural persons

When we talk about the taxes payable by individuals in Argentina, it’s important to understand that they’re mainly divided into two types: direct and indirect. Direct taxes are those levied on a person’s income or wealth, such as income tax and personal property tax. These taxes are usually progressive, i.e. they increase as the taxpayer’s ability to pay increases.

Indirect taxes, on the other hand, are levied on the consumption of goods and services, such as VAT. This type of tax is paid by the final consumer every time he/she buys a product or uses a service

Each type of tax that individuals must pay is detailed below. 

Income Tax

It’s one of the most important taxes in Argentina and is levied on the income of individuals and companies. This tax is based on the income earned during the tax year and is progressive in nature, which means that as the annual income of a person or company increases, so does the percentage of tax payable.

For individuals, the tax is levied on net profits, i.e. after deducting deductible expenses allowed by law (such as pension contributions, medical expenses, education and others). The structure is progressive and is structured in scales that apply different rates depending on the annual income. In Argentina, rates vary between 5% and 35%, the latter percentage being paid by those with higher incomes.

Here we show you how the scale works to help you understand it better:

• Income up to $164,571 US: Rate of 5%
• From $164,571 to $329,142 US: Rate of 9%
• From $329,142 to $493,713 US: Rate of 12%
• From $493,713 to $658,284 US: Rate of 15%
• From $658.284 to $822.855 US: Rate of 19%
• From $822.855 to $1,096,000 US: Rate of 23%
• From $1,096,000 to $1,643,800 US: Rate of 27%
• From $1,643,800 to $2,191,600 US: Rate of 31%
• Over $2,191,600 US: 35% tax rate

As you can see, this tax can represent a considerable burden for those with higher incomes. However, it also seeks to adapt to the level of income in order to achieve greater fiscal equity.

Personal Property Tax

This tax is levied on the total value of a person’s assets as at 31 December of each year. Taxable assets include property, vehicles, bank accounts and foreign assets. The rate varies from 0.5% to 1.25%, depending on the total value of the goods. For goods abroad, the rate may be increased.

For the tax period 2023, the non-taxable minimum was set at $6,000,000 ARS. This means that only those who own more than this amount of wealth are liable to pay the tax. Let’s look at an example. Imagine you have a net worth of $40,000,000 ARS ($37,892.06 US). In this case, the corresponding rate would be 1.00% on the excess of $36,000,000 ARS ($34,102.86 US), plus a lump sum of $195,000 ARS ($184.72 US).

Value Added Tax (VAT)

VAT is an indirect tax applied to consumption and affects most goods and services in Argentina. The general VAT rate is 21%, although some basic products have reduced rates, such as food and medicines, which are considered basic necessities (10.5%).

For example, if you buy a product with a value of $1000 ARS ($0.95 US), the VAT added would be $210 ARS ($0.20 US), resulting in a total price of $1210 ARS ($1,15 US).

Tax on Bank Debits and Credits (Cheque Tax)

This tax is levied on bank transactions, both debits and credits to current accounts. The fee is 0.6% for each transaction, so if you make a transfer of $10,000 ARS ($9.47 US), you’ll be charged a tax of $60 ARS ($0.057 US).

The Cheque Tax has been the subject of debate on more than one occasion, as many consider it to be disruptive. By being levied on every banking transaction, the tax affects the profitability of companies and discourages the use of the banking system, especially for small and medium-sized enterprises. However (and despite its “temporary” implementation in 2001), it’s still in force and is a significant source of revenue for the Argentine state.

Taxes in Argentina: Social Security Contributions

Employees are required to contribute a percentage of their salary to the social security and health system. The rate is approximately 17% of salary. Thus, if you receive a salary of $50,000 ARS ($47.73 US) per month, you’ll have to contribute approximately $8,500 ARS ($8.05 US).

Taxes for legal persons or companies in Argentina

Companies in Argentina are also subject to various taxes that impact both profitability and operating costs, and are divided into national, provincial and municipal taxes. Understanding the different types of taxes for legal entities in Argentina, as well as the applicable rates and filing and payment obligations, is essential, as proper tax planning can optimise the tax burden and avoid penalties. 

Corporate Income Tax

In Argentina, the Corporate Income Tax, also known as Corporate Tax, is levied on the net income earned by legal entities carrying out economic activities in the country. This tax is levied on profits generated in the tax year, at a rate that varies according to the amount of income earned.

Since the tax reform, a progressive scale has been established with rates that vary according to the level of profitability of the company, differentiating three main brackets:

1. Companies with net profits of up to $5,000,000 ARS ($4,736.51 US): A rate of 25% applies.
2. Companies with net profits between $5,000,000 ARS ($4,736.51 US) and $50,000,000 ARS ($47,365.08 US): The rate is 30%.
3. Companies with net profits above $50,000 ARS ($47.37 US): A rate of 35% applies.

In addition, companies that distribute profits are subject to an additional 7% tax on distributed profits.

We help you understand this with an example: imagine you have a company that collects $60,000,000 ARS ($56,838.10 US) in net profits. In that case, you’ll have to pay tax:

• 25% on the first $5,000,000 ARS ($4,736.51 US)
• 30% on the $5,000,000 ARS ($4,736.51 US) to $50,000,000 ARS ($47,365.08 US) bracket
• 35% on the excess of $50.000.000 ARS ($47,365.08 US)

In addition, if you decide to distribute part of the company’s profits, the corresponding 7% would be added to the amounts distributed to your shareholders or partners.

Value Added Tax

Similar to VAT for individuals, businesses must also collect and remit this tax on the sale of goods and services. The rate is the same, i.e. 21% for most goods and services. Some specific activities, such as education, certain health services, and some basic food basket products, may be exempt from VAT or have reduced VAT rates.

Now, do all businesses have to pay VAT? Most, except those that qualify for the Simplified tax regime (as this regime unifies several taxes in a single monthly instalment) or that are engaged in exempt activities or exports. In addition, exporting companies can apply for a refund of VAT paid on purchases of inputs and services related to exports.

Tax on Bank Debits and Credits (Cheque Tax)

Companies are also subject to this tax on their banking transactions, at a rate of 0.6% per transaction. It impacts every credit (deposit) and debit (withdrawal) made to bank accounts registered in the company’s name. It’s therefore relevant for those who handle large volumes of banking transactions, as each transaction increases the operational cost.

It’s an automatic tax that’s applied directly at the moment the bank processes the debit or credit to the account. Companies will see this reflected in their bank statement as a percentage deducted from each transaction. It affects not only transfers and payments, but also cheque deposits, payroll payments and movements related to the day-to-day operations of the company. 

Some transactions are exempt from Cheque Tax, such as movements between the same company’s own accounts at the same bank. In addition, specific transactions related to financial and governmental entities may be exempted, depending on the nature of the activity.

What about small and medium-sized enterprises? Those registered in the MSME Registry have a higher compensation and can deduct up to 100% of the Cheque Tax in their income tax obligations, which represents a significant tax relief.

Taxes in Argentina: Employer’s contributions

Companies are required to make social security contributions for the benefit of their employees, in order to finance benefits such as pensions, social security, the health system, occupational risk insurance and the unemployment fund.

Employer contribution rates vary according to the type of employer and the sector in which the company operates. In general, however, employers must contribute 20.4% of each worker’s gross salary to the social security system. In the case of companies engaged in service and trade activities with more than 300 employees, this rate increases to 21%.

Gross Income

The Gross Income Tax is a provincial tax levied on the exercise of commercial, industrial, service and any other economic activity that generates income in the Argentine territory. This means that all individuals and legal entities carrying out economic activities in Argentina are subject to the tax, including companies of any sector, as well as independent workers and self-employed professionals.

It’s administered by each of the provinces and by the Autonomous City of Buenos Aires, which means that fees and regulations vary according to jurisdiction. Its rate varies between 3% and 5%, depending on the activity and location of the company. For example, in the City of Buenos Aires, the rate for commercial activities is 3%, while in some provinces, industrial activities have a preferential rate of around 1%.

Municipal Taxes

Municipal taxes are fee companies must pay to the municipalities where they operate. Unlike general taxes, fees are levied in return for specific services provided by the municipality, such as lighting, cleaning and sweeping.

Tax benefits in Argentina

While the tax burden can be high, there are a number of tax benefits in Argentina that are designed to promote investment, encourage job creation and improve the competitiveness of companies. These incentives for companies and individuals are intended to stimulate economic growth and attract foreign investment.

Benefits for companies

Argentina offers tax benefits to new companies, especially those in strategic sectors such as technology and renewable energy. These incentives include tax exemptions and tax credits.

• Free Trade Zone and Industrial Promotion: Argentina is a very large country, with geographic areas that are more unfavourable than others. Hence, it has free trade zones in different regions, where companies enjoy tax exemptions. Within these zones, national and provincial taxes and export duties are eliminated, which considerably reduces costs for companies engaged in commercial and industrial activities.
• For example, in the Tierra del Fuego free trade zone, technology companies and manufacturing industries can access significant tax exemptions, generating savings in operating costs and encouraging local job creation.
• Knowledge Economy Law: This regime is designed for companies operating in high-tech sectors, including software, biotechnology, and exportable professional services. Companies registered under this law obtain tax benefits such as a reduction in income tax, fiscal stability, and the elimination of VAT withholdings and deductions for exports.
• Investment Promotion: Argentina has investment promotion agreements that offer tax exemptions for companies that make significant investments in certain regions or strategic sectors. For example, companies investing in infrastructure, renewable energy and mining can obtain tax exemptions or deferrals, which help offset the high upfront costs of these projects.
• Incentives for MSMEs: Small and medium-sized enterprises can benefit from VAT refunds, facilities for the payment of tax debts, the exclusion of VAT withholdings in certain cases, among other things.

Benefits for individuals

• Tax exemption for expatriates: Argentina offers temporary tax exemptions to foreigners moving to the country for work purposes. Thus, expatriates can benefit from a partial income tax exemption during their first years in the country. This is especially useful for multinational companies sending workers to Argentina, as it reduces the overall cost of relocation.
• Deductions for investment in housing: Income tax deductions are offered to individuals who invest in their first home. In addition, there are mortgage credit benefits that allow the interest on such loans to be deducted.
• Deduction of educational expenses: Argentina allows the deduction of certain educational expenses. Thus, families with children in higher education institutions benefit.

Incentives for foreign investment and relocation of companies

• “Preferential Tax Residency” programmes: Through specific programmes, Argentina offers incentives to those who establish their tax residence in the country. In this way, foreigners who transfer their tax residence to Argentina can access benefits in the Personal Property Tax, exemptions in profits of foreign origin and other incentives that improve their investment capacity in the country.
• Double Taxation Agreements: Argentina has tax agreements with several countries to avoid double taxation, which benefits foreign companies and the self-employed. This means that taxes paid in Argentina can be credited in the country of origin, avoiding double taxation.
• Sectoral benefits: The country also offers incentives for sectors such as mining, agriculture and renewable energy. These include tax credits, export tax reductions and VAT exemptions for machinery and inputs.

Taxes in Argentina: Frequently asked questions

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