Income tax in Argentina
Taxation Researcher | February 18, 2020
Residents are taxed on their worldwide income. Married individuals are assessed and taxed separately but income from property acquired during marriage is allocated to the husband, except in certain special cases.
National tax collection is the responsibility of the Federal Administration of Public Revenue (Administracion Federal de Ingresos Publicos). The Argentine tax system is based on self-assessment. Individuals with significant non-wage income are required to make five advance payments towards their final tax liability, bi-monthly, from June to February, calculated as a percentage of the previous year´s payments.
The tax laws establish very detailed rules on how tax is to be calculated. It is important to keep records. Penalties for failing to make tax returns or omitting tax income can be 50% to 100% of the tax obligation.
Foreign nationals who stay in Argentina with a permanent visa (for immigration purposes) or with a temporary visa for at least twelve months are deemed to be residents and therefore subject to tax on their global income.
There are four categories of income: (1) income from land or rental income and any other income realized from the ownership of immovable property, (2) income from personal capital assets such as derived from royalties and bonds, income from movable property, etc., (3) income derived by enterprises (corporations and partnerships) and any other income not included in other categories, and (4) income from employment.
Income tax is levied on total income less applicable deductions and allowances. Income is taxed at progressive rates.
INCOME TAX 2017
|TAXABLE INCOME, ARS (US$)||TAX RATE|
|Up to 10,000 (US$345)||9%|
|10,000 - 20,000 (US$690)||14% on band over US$345|
|20,000 - 30,000 (US$1,035)||19% on band over US$690|
|30,000 - 60,000 (US$2,069)||23% on band over US$1,035|
|60,000 - 90,000 (US$3,105)||27% on band over US$2,069|
|90,000 - 120,000 (US$4,138)||31% on band over US$3,105|
|Over 120,000 (US$4,138)||35% on all income over US$4,138|
|Source: Global Property Guide|
Residents are entitled to deduct personal allowances, family allowances, and expense allowances when computing the taxable income.
|Basic personal allowance||ARS9,000 (US$300)|
|Special allowance for employees||ARS43,200 (US$1,490)|
|Special allowance for the self-employed||ARS9,000 (US$310)|
|Spouse (dependent on tax payer)||ARS10,000 (US$345)|
|Each dependent child (less than 24 years old)||ARS4,000 (US$138)|
|Gifts to government and other institutions||up to 5% of taxable income|
|Funeral expenses||ARS996 (US$34)|
|Qualifying life insurance premiums||ARS996 (US$34)|
|Contributions to medical aid for
taxpayer and immediate relatives
|Up to 5% of net income|
|Social security contributions|
|Health expenses (up to 40% of expenses)||Up to 5% of the net income|
|Interest on mortgages||ARS20,000 (US$690)|
|Domestic services||ARS9,000 (US$310)|
Real estate rental income from property located in Argentina is subject to tax at a flat rate of 35%, withheld by the tenant. The taxable income is presumed to be 60% of the gross income; therefore, the effective rate is 21% on gross rental income (i.e. 35% tax on 60% of the gross income).
The taxpayer may choose to be taxed on the actual net income. The actual expenses incurred which are necessary for obtaining the rental income, or preserving its source can be deducted. Expenditures are deductible only if they are properly supported by valid documents. The withholding tax is 35% of the amount thus established.
Depreciation is deductible on a straight-line basis; the normal annual rate for real property is 2% of the building or construction costs plus expenses incurred in connection with the purchase of the property, such as taxes, realtors´ commissions, etc. Improvements carried out on rented properties are also subject to depreciation, in which case depreciation will be computed as a deductible expense by the renting party, as opposed to the owner of the building.
Gross Revenue Tax (Impuesto sobre los ingresos brutos)
Gross revenue is taxed by the Provincial Government.at rates ranging from 3% to 5%, depending on the jurisdiction. However rental income paid to individuals is exempt from this tax, provided the maximum number of rented real properties does not exceed the maximum established by each jurisdiction, i.e.
- Buenos Aires City: two properties, provided the rental value does not exceed ARS1,350 (US$90)
- Province of Buenos Aires: two properties, provided the rental value does not exceed ARS7,000 (US$467)
Stamp Duty on Property Leases
Rental contracts are subject to stamp duty by the Provincial Government at rates varying between 0.5% and 2.5%. In Buenos Aires City, the tax rate is 0.5% but rental contracts of real properties non-destined for commercial activities are exempt.
VALUE ADDED TAX (Impuesto al valor agregado)
Rental value corresponding to real estate properties belonging to taxpayers exceeding ARS1,500 (US$100) a month is assessable at 21%, except for rentals of residential properties, properties rented to the Argentine State or rural properties related to farming activities.
CAPITAL GAINS TAX
Sale of real estate properties is subject to capital gains tax at a flat rate of 15%. Acquisition costs and related expenses, which may be adjusted for inflation, are deductible when calculating the taxable capital gains.
Tax on Personal Assets (Impuesto sobre los bienes personales)
Residents are liable to pay this tax on their net wealth, and the tax on personal assets is levied at progressive rates, from 0.25% to 0.75%.
The threshold amount was ARS950,000 (US$32,759) in 2017, and was ARS1.05 million (US$36,207) in 2018.The threshold amount is ARS2 million(US$68,966) in 2019.
Local governments also assess the cadastral value of the real estate and levy a real estate tax. The taxable base for the local taxes will not exceed 80% of the property´s market value. The tax rates are 1.20% for rural properties, 1.35% for sub-rural and sub-urban properties, and 1.50% for urban properties.
The municipality also imposes a charge of 0.55% for lighting, sweeping and cleaning services.
Income and capital gains earned by companies are subject to corporate income tax at a flat rate of 25% as of 01 January 2020. Income-generating expenses are deductible when calculating taxable income.
The corporate income tax rate is 30% for the two fiscal years until 31 December 2019.