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4.4. Branch Profit (Deemed) Remittance Tax

Effective 1 January 2021, the withholding tax rate on dividend distributions (which also covers branch profit remittances) is restored back to 7% from a planned increase to 13%.

As explained in 8.1.2., Argentina traditionally had a dividend taxation system under which profits already taxed at the corporate level were not subject to further taxation upon distribution. As a result, remittances of profits by local branches (similarly to dividends) were not subject to tax if remitted out of earnings and profits already taxed at the corporate level. Otherwise, an equalization tax consisting of a withholding of 35% on the excess of accounting over taxable profits at the corporate level applied.  

However, effective from 1 January 2018 the equalization tax was repealed and instead a 7% tax applied on dividend distributions and branch profit remittances. The 7% rate was planned to be increased to 13%, initially from 1 January 2020 before the effective date was postponed to 1 January 2021. Effective 1 January 2021, the new law rescinds the planned rate increase and maintains the dividend withholding tax rate (and consequently also the branch remittance tax rate) at 7%.