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Taxation of Argentine Companies

Taxation of Argentine Companies. Taxation of worldwide income. Local source income: income deriving from assets situated in the Argentine Republic or activities carried out in the Argentine Republic. Special case: advice – derivatives - rights.

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Taxation of Argentine Companies

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  1. Taxation of Argentine Companies

  2. Taxation of worldwide income • Local source income: income deriving from assets situated in the Argentine Republic or activities carried out in the Argentine Republic. Special case: advice – derivatives - rights. • Individuals and corporations subject to tax on global source income are entitled to a credit for similar taxes paid abroad up to the increase of the argentine obligation derived from the inclusion of the foreign source income.

  3. Taxation of resident and non resident individuals • Argentine tax residents are subject to income tax on their global source income. • Non tax residents are subject to income tax on their local source income. Special case: expatriates. • Foreign persons are entities or individuals that receive, directly or indirectly, Argentine source income outside Argentina or those receiving such income in Argentina without residency in the country

  4. Registration and accounting • Accounting books and special register of transactions • Accounting registers must be evidenced by its corresponding receipts. • Accounting books for the FTA disposal at the fiscal domicile

  5. General scheme for arriving and taxable income and source income • Ordinary income vs. Capital gains • Timing. Cash & Accrual methods • Individuals and corporations • Deductions – depreciation • Tax-free reorganizations

  6. Tax incentives for various industries • Biofuel. Law no. 26093 • Software industries. Law no. 25922 • Investments in capital assets and infraestructure works.

  7. Biofuel • Requirements: • Project be established in Argentine Territory • Owned by commercial companies incorporated in Argentina • Produce biofuels in compliance with definitions and quality conditions established Benefits: • Hidric Infrastructure Tax • Liquid Fuel Tax • Gas Oil Transfer Tax • Early VAT refund or accelerated depreciation

  8. Software • Requirements: • Individuals or corporations incorporated in Argentina mainly engaged in software industry. • Registration • Develop creation, design, production • Comply with quality requirements. Benefits: • Fiscal stability for 10 years • Non-transferable tax credit up to 70% of the employers’ social security contributions actually paid on the total payroll of the company • Income Tax relief for those who prove that they made research and development expenses or software exports

  9. Investments in capital assets and infrastructure works • Requirements: • Individuals domiciled and corporations organized in Argentina • developing manufacturing activities • investment project in industrial activities or for the execution of infrastructure works • Evidencing true employment positions Benefits: • anticipated refund of the value-added tax corresponding to the property or infrastructure works included in the investment project or, • accelerated amortization thereof for income tax purposes

  10. Double taxation relief • Avoid overlapping of taxes among residents in two or more different Contracting States on the same taxable issue • Agreements ratified by the Argentine Republic are applied to taxes on income or revenue, shareholders’ equity, and potential benefits. • Foreign residents would be benefited by the application of reduced rates established in the Agreement whenever they were to make a payment subject to the tax withholding.

  11. Other business taxes… • Value Added Tax • Minimum Presumed Income Tax • Personal Asset Tax • Stamp Tax

  12. Value Added Tax • Output tax and input tax levied on the sale of goods, contracts for work or contracts for the provision of services, or lease agreements and imports of goods and services • There are exemptions to some products and services (e.g. exports) • Applied to the net price of the goods or services, generally at the rate of 21% (it might be 10.5% or 27% in some specific cases)

  13. Minimum Presumed Income Tax • Levied at a national level • 1% rate to assets located in the Argentine Republic or abroad • It is a tax generated on a presumption of income obtained by the taxpayer

  14. Personal Asset Tax • levied on all of the property owned by the taxpayers at the end of the calendar year • Taxpayers: (i) individuals and states (“sucesiones indivisas”) domiciled in Argentina, for the assets located in Argentina and abroad; and (ii) individuals and states domiciled abroad, only for the assets located in Argentina. • Special case: interest in local corporations

  15. Stamp Tax • Local tax on documents • Usually applied at the rate of 1% on any document or exchange of documents evidencing the creation, amendment and/or extinction of pecuniary rights and/or obligations • Payable upon local execution of what is considered to be a “taxable document” in each of the provinces. • Applicable to a document having “effects” in a given province other than the one in which it has been executed.

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