globaltaxnews.ey.comSign up for tax alert emailsPrintDownload

10 October 2023

Argentine Government amends the Income Tax Law, incorporating 'cedular' tax for 'high-income' individuals

  • As of 2024, earnings of employees, retirees and pensioners that exceed the equivalent of 180 Minimum, Vital and Mobile Annual Salaries ("SMVM" in Spanish) per year will be subject to a "cedular" tax at a progressive scale with rates between 27% and 35%.
  • As of today, considering current official exchange rate and SMVM, this USD amount would be approx. $5,600 per month. This means that employees making less than this amount would not be subject to individual income tax in Argentina.

On 6 October 2023, the Argentine National Executive Branch (PEN in Spanish) issued Decree 508/2023, enacted Law 27,725 (the Law), which amends the Income Tax Law starting on 1 January 2024. The main highlights of the new law follow.

A "cedular" tax on "high incomes" received through salaries, retirements and pensions is incorporated, replacing the current income tax paid by employees. This "cedular" tax will not apply to salaries received by directors, "sindicos" and members of supervisory boards of corporations and equivalent positions that will continue to be subject to the current individual income tax regime.

The Law clarifies that individuals receiving income exceeding the equivalent of 180 times the SMVM (Spanish acronym for Minimum, Vital and Mobile Annual Salaries) would be considered as high-income earners subject to the "cedular" tax.

In light of the above, salaries that do not exceed the mentioned threshold will be exempt from income tax and consequently not subject to individual income tax withholding by the employers, while the salaries exceeding the threshold amount shall be taxed at a progressive scale between 27% to 35%.

For the purpose of determining the tax, the SMVM in force as of 1 January 2024 will be considered and will be updated on 1 July of each year. As of today, considering current official exchange rate and SMVM, this USD amount would be approximately $5,600 per month. This means that employees making less than this amount would not be subject to individual income tax in Argentina.

Provisions of the Law 27,725 will apply for fiscal year 2024 onward.

———————————————

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

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

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

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

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

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2023-1682

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more