Argentine Government modifies bill it plans to send to Congress that would raise corporate income tax rates

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12 April 2021

The new bill would increase the thresholds at which the previously proposed rates would apply. As in the prior bill, the new bill would also extend the 7% withholding tax to dividends from profits accrued in tax years beginning 1 January 2021 and thereafter.

On 7 April 2021, the Argentine Executive Power circulated an updated version of the bill that it plans to send to Congress that would increase corporate income tax rates for tax years beginning 1 January 2021 and onwards. The previous version of the bill was circulated on 11 March 2021 (see EY Global Tax Alert, Argentine Government plans to send bill to Congress that would raise corporate income tax rates, dated 16 March 2021).

Characteristics of the bill

Like the prior version, the new bill would replace the 25% fixed tax rate currently in effect with a progressive tax scale. The new bill, however, would increase the thresholds at which the new rates would apply. For tax years beginning 1 January 2021, the following ranges would apply:

For accumulated net taxable income up to ARS5,000,000 (approx. US$55,500): 25% tax rate on net taxable income
For accumulated net taxable income from ARS 5,000,001 to ARS20,000,000 (approx. US$222,200): ARS1,250,000 (approx. US$13,800) plus a 30% tax rate on accumulated net taxable income exceeding ARS5,000,000
For accumulated net taxable income exceeding ARS20,000,000 (approx. US$222,200): ARS5,750,000 (approx. US$63,800) plus a 35% tax rate on accumulated net taxable income exceeding ARS20,000,000

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

The new 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 the National Statistics and Census Institute (INDEC), an agency of the Ministry of Economy.

As in the prior bill, the new bill would permanently extend the 7% withholding tax rate currently in force for 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