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Argentine Government plans to send bill to Congress that would raise corporate income tax rates — Orbitax Tax News & Alerts

The proposed bill would increase tax rates on large entities by replacing the current fixed tax rate with a progressive tax scale. It would also extend the 7% withholding tax on dividends from profits accrued in tax years beginning 1 January 2018, to dividends from profits accrued in tax years beginning 1 January 2021 and thereafter.

On 11 March 2021, the Argentine Executive Power circulated a bill that it plans to send to Congress that would increase corporate income tax rates for tax years beginning 1 January 2021 and onwards.

Characteristics of the bill

The bill would replace the 25% fixed tax rate currently in effect with a progressive tax scale with the following ranges for tax years beginning 1 January 2021:

  • For accumulated net taxable income up to ARS1,300,000 (approx. US$14,400): 25% tax rate on net taxable income

  • For accumulated net taxable income from ARS1,300,001 to ARS2,600,000 (approx. US$28,800): ARS325,000 (US$3,600) plus a 30% tax rate on accumulated net taxable income exceeding ARS1,300,000

  • For accumulated net taxable income exceeding ARS2,600,000 (approx. US$28,800): ARS715,000 (approx. US$7,900) plus a 35% tax rate on accumulated net taxable income exceeding ARS2,600,000

The new tax rates also would apply to permanent establishments in Argentina as defined by the income tax law.

The bill also would allow the ranges of net taxable income to be adjusted annually beginning 1 January 2022, considering the annual variation as of October of the previous year of the consumer price index (IPC for the Spanish acronym) provided by National Statistics and Census Institute (INDEC), an agency of the Ministry of Economy.

In addition, the bill would permanently extend the 7% withholding tax rate currently in force for dividend distributions from profits accrued in tax years beginning 1 January 2018, to dividend distributions from profits accrued in tax years beginning 1 January 2021 and onwards.

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For additional information with respect to this Alert, please contact the following:

Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires

  • Carlos Casanovas | carlos.casanovas@ar.ey.com
  • Gustavo Scravaglieri | gustavo.scravaglieri@ar.ey.com
  • Ariel Becher | ariel.becher@ar.ey.com
  • Pablo Baroffio | pablo.baroffio@ar.ey.com
  • Juan Ignacio Pernin | juan.pernin@ar.ey.com

Ernst & Young LLP (United States), Latin American Business Center, New York

  • Pablo Wejcman | pablo.wejcman@ey.com
  • Agustina Paula Paradiso | agustina.p.paradiso1@ey.com
  • Ana Mingramm | ana.mingramm@ey.com
  • Enrique Perez Grovas | enrique.perezgrovas@ey.com

Ernst & Young Abogados, Latin American Business Center, Madrid

  • Jaime Vargas | jaime.vargas.c@es.ey.com

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

  • Lourdes Libreros | lourdes.libreros@uk.ey.com

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

  • Raul Moreno, Tokyo | raul.moreno@jp.ey.com
  • Luis Coronado, Singapore | luis.coronado@sg.ey.com