Country Tax Guide.

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1 Country Tax Guide

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3 Facts and figures as presented are correct as of 18 August Corporate Income Taxes Resident companies, defined as those companies which are incorporated under the laws of Argentina and permanent establishments of foreign companies, are subject to income tax on their worldwide income. A credit method for taxes paid on foreign source income is provided in the Argentine Income Tax Law to avoid double taxation if certain criteria are met. Non-resident companies with business income and no local presence in Argentina are subject to tax on their Argentine source income. Different effective withholding rates apply depending on certain factors, including if a double tax treaty is applicable. The general corporate income tax rate is 35%. Capital gains derived by resident companies are included in taxable income and are subject to corporate income tax. Certain capital gains derived by non-resident companies are generally subject to a 15% tax rate. A 35% equalisation tax may apply to dividends and profit distributions paid to residents and non-residents when a company s profits, according to its financial statements, exceed its net taxable income if the earnings distributed have not already been taxed at the corporate level. Resident companies and branches of foreign companies are generally subject to a minimum presumptive income tax. The standard rate is 1%; other rates may apply to certain types of companies. This is a corporate asset tax that is levied annually on the value of the company s worldwide assets (with certain exceptions) at the end of the fiscal year, calculated according to specific valuation criteria. This tax is payable to the extent it exceeds regular corporate income tax for the year. Dividends distributed by Argentine companies and certain Argentine entities to Argentine individuals or foreign shareholders are generally subject to a 10% tax. This tax applies in addition to the 35% equalisation tax, where applicable. Companies may also be subject to a local tax on their gross receipts. The rates vary depending on the province or other jurisdiction which is levying the tax. To avoid double taxation in cases where activities subject to taxation have been carried out in more than one jurisdiction, some jurisdictions have signed a multilateral agreement to allocate income between the respective jurisdictions. Generally, losses may be carried forward for relief against future profits for a maximum of five years from the year in which the loss is incurred. Losses in respect of certain items, however, may only be offset against the same type of income. Carry-back of losses is not permitted.

4 Country Tax Guide Argentina In Argentina, there is no group consolidation for tax purposes. The fiscal year is generally the calendar year, but companies may choose instead to have a fiscal year that corresponds to the period for which they prepare their financial statements. A tax return must be filed within five months of the fiscal year end. Corporations and foreign company branches are required to make ten monthly prepayments of tax, as from the sixth month of the fiscal year. Prepayment amounts are generally based on the tax paid in the preceding fiscal year. Personal Taxes Resident individuals are generally subject to income tax on their worldwide income. Non-resident individuals are subject to income tax on their income from sources in Argentina. Personal income tax is charged at graduated rates (after permitted deductions), with a top rate of 35% on taxable income in excess of ARS120,000. Dividends received from a foreign company are treated as foreign source income and are subject to personal income tax. Dividends received from resident companies and certain entities are, generally, subject to a 10% withholding tax at source, which may be in addition to the equalisation tax, where applicable. Certain capital gains, such as those arising from certain share transfers, are generally subject to tax at a rate of 15%. An exemption applies to resident individuals for publicly-traded securities if the trading is done through an exchange market that is duly authorised by the Argentine Securities and Exchange Commission. There are no national inheritance and gift taxes in Argentina. However, provincial inheritance and/or gift taxes may apply, as in the case of the province of Buenos Aires. An annual tax on net wealth (personal assets tax) is levied on the worldwide assets of resident individuals, valued over a certain threshold amount, at graduated rates with a top rate of 1.25%, subject to exceptions. Non-resident individuals with assets in Argentina are also subject to this tax at a rate of 1.25% for assets valued over a certain threshold amount held in Argentina. A rate of 0.5% applies on the equity interest that Argentine individuals and nonresidents individuals have in resident incorporated entities and local branches.

5 Employment Related Costs and Taxes Fringe benefits There is no separate fringe benefits tax in Argentina. The value of taxable benefits-in-kind are generally included in taxable income and taxed accordingly. Social security costs Both employers and employees make contributions to Argentina s social security system. Employer contributions to social security are based on the employee s gross salary and are not capped. There is a cap on the maximum salary subject to the employee contribution and this cap may be modified during the year. In general, employer contributions are payable at a rate of 23% of the employee s gross salary. Companies rendering commercial or service activities and whose annual sales exceed ARS48 million are required to contribute an additional 4%, bringing their total employer social security contribution to 27%. The additional 4%, generally, may be credited as input value added tax (VAT). Employee contributions are payable at the rate of 17% of their gross salary, up to a maximum salary cap that may be modified during the year. Withholding Taxes on Payments Abroad In general, withholding taxes apply to Argentine source income remitted abroad to a non-resident entity, individual or alien. The statutory rates of withholding may be reduced under the terms of an applicable double tax treaty. The general withholding tax rate on dividends paid to non-residents is 10%. If the corresponding profits being distributed were not taxed at the corporate level, then a 35% withholding also applies consistent with the equalisation tax. Payments of interest are subject to a general withholding tax rate of 35%, reduced to 15.05% in some specified cases. The general withholding rate for royalties is 31.5%. Payments for services deemed unavailable in Argentina, where the contract has been properly registered with the National Institute of Industrial Property (INPI) consistent with the Transfer of Technology Law, are subject to a withholding rate of 21%. Payments under contracts that are properly registered pursuant to the Transfer of Technology Law, but which do not qualify for the 21% rate, are subject to a 28% withholding rate. Unregistered transfers of technology are subject to the general withholding rate of 31.5%. Other specific rates apply in certain cases. For example, royalty payments from agreements that are in compliance with Argentina s Copyright Law are subject to a withholding tax of 12.25%.

6 Country Tax Guide Argentina Value Added Tax (VAT) VAT is charged on supplies of goods and services and on the importation of goods and services. The general VAT rate is 21%. There are reduced and increased VAT rates for certain goods and services. A reduced rate of 10.5% applies to certain items and transactions, including certain long distance passenger transportation, while a higher 27% rate applies to other items, including certain telecommunications services. Some transactions and services are designated as exempt and others as zero-rated for VAT purposes. Exports are designated as VAT exempt; however, given that exporters are generally allowed to recover VAT input credits in connection with export processes, VAT treatment of exports is similar to that applied to zero-rated items. Generally, input VAT may be deducted from output VAT, with some exceptions. Other Taxes Real estate tax The provinces charge a local real estate tax on the value (as defined) of owned real estate. The rates vary depending upon the jurisdiction. Stamp tax Stamp tax is charged on the value (as defined) of a number of specific transactions, including transfers of real estate, written contracts and deeds. Rates vary depending upon the jurisdiction. Debits and credits in bank accounts tax The Debits and Credits in Bank Accounts Tax is a national level tax that is withheld by Argentine banks and other savings institutions. Debits and credits from bank accounts are subject to this tax with limited exceptions. It applies, generally, on deposited funds that are either withdrawn or transferred from checking or savings accounts. The taxable base is the amount withdrawn or transferred. The general tax rate is 0.6% on the amount of the transaction but other rates may apply, for example, where it is deemed collection mechanisms are being used to avoid the use of bank accounts. Part of this tax may be credited against other national taxes.

7 Excise taxes Excise tax is levied on a number of items, including tobacco, wines, and luxury items. Tax Incentives for Businesses Research and development (R&D) expenditure Tax benefits are granted to encourage expenditures on scientific research and development in targeted industries like the software industry. The types of benefits for qualifying businesses can cover a wide range. Examples include profits tax relief and reductions in social security charges, amongst others. Other tax incentives Taxpayers may register, until 31 December 2014, for an incentive programme aimed at promoting investment in capital goods and infrastructure projects. Many provinces also have legislation creating incentives to attract industries to invest, build and expand within their jurisdiction, and to encourage job creation, for example. Incentives may include exemptions from certain provincial and municipal taxes, reduced public utility charges, and infrastructure support, amongst others.

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