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Argentina amends corporate income tax and withholding on dividend rates as from FY 2021
June 2021
In brief
Argentine Law 27,630, which introduced amendments to the corporate income tax (CIT) law, entered into force on June 16, 2021.
The takeaway: Taxpayers conducting business in Argentina should model how the amended CIT and withholding rates could impact current tax costs and operations and any planned transactions.
Corporate income tax rate
Under prior law, the CIT rate was 25%. Under the new law, which applies to fiscal years starting on or after January 1, 2021, corporate income is subject to tax at progressive rates ranging from 25% to 35% as follows:
- Taxable income from $0 to $5M (~USD 52,000): 25%.
- Taxable income from more than $5M to $50M (~USD 523,000): $1,250,000 (~USD 13,000) + 30% on the amount that exceeds $5M.
- Taxable income from more than $50M: $14,750,000 (~USD 155,000) + 35% on the amount that exceeds $50M.
**Amounts are in Argentinian pesos except for parenthetical amounts, which are US dollar**
Beginning January 1, 2022, these brackets will be adjusted annually to account for inflation, as determined by the consumer price index ‘IPC’, published by the relevant governmental agency (INDEC).
Withholding on dividend distributions to nonresident shareholders
Under prior law, distribution of earnings attributable to fiscal year 2021 was subject to withholding tax at a 13% rate. This rate was calculated based on the prior CIT rate of 25%. Law 27,630 no longer ties the withholding tax rate on dividend distributions to non-residents to the corporate income tax and instead reduces the rate to 7% for earnings obtained on or after January 1, 2021.
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