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Argentine Government proposes windfall corporate income tax — Orbitax Tax News & Alerts

The bill would establish a one-time 15% “windfall income tax” for companies that obtained extraordinary income from the increase in international prices. The 15% rate would apply to the excess of net taxable income resulting from the difference of the (1) net taxable income obtained in the first tax year ended on or after the month immediately following the month in which the bill is enacted and (2) net taxable income from the previous tax year adjusted by the variation of the Consumer Price Index (CPI).

On 6 June 2022, the Argentine Government sent to the Chamber of Deputies a bill that would establish a one-time “windfall income tax” for companies that obtained extraordinary income from the increase in international prices. Based on the current Argentine political environment, it is uncertain whether the Argentine Congress will approve this bill.

Bill provisions

The bill would establish a one-time additional 15% windfall income tax on the excess of the net taxable income resulting from the difference of the (1) net taxable income obtained in the first tax year ended on or after the month immediately following the month in which the bill enters into force, and (2) net taxable income from the previous tax year adjusted by the variation of the CPI, published by the National Institute of Statistics and Census.

The windfall income tax would apply to companies that meet the following requirements:

  • The net taxable income or the accounting profits adjusted for inflation for the first financial year ending on or after the month immediately following the month in which the bill enters into force is at least ARS$1 billion; and

  • (i) The accounting profits adjusted for inflation for the first financial year ending on or after the month immediately following the month in which the bill enters into force represents at least 10% of the total gross income for that period; or (ii) the ratio between the accounting profits adjusted for inflation for the first financial year ending on or after the month immediately following the month in which the bill enters into force and the total gross income for that period, is at least 20% higher than the same ratio for the previous year.

The bill would exclude the income tax and the extraordinary results from the calculations referred to in the previous paragraph, in accordance with the regulations to be issued after the bill’s enactment.

If approved by the Argentine Congress, the bill would be enacted on the date of publication in the Official Gazette and would apply for the first financial year ending from the first day of the month immediately following enactment and the last day of the 12th month immediately following that date.

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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
  • Sergio Caveggia | sergio.caveggia@ar.ey.com
  • Pablo Baroffio | pablo.baroffio@ar.ey.com
  • Sabrina Maiorano | sabrina.maiorano@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
  • Lucas Moreno | lucas.moreno@lan.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