Managing Corporate Taxation in Latin American Countries - Argentina.

Extract

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Managing Corporate Taxation in Latin American Countries - Argentina.

Overview

1.Income Tax

1.1. General Aspects

1.1.1. Income Tax Rate.

The general statutory corporate income tax rate for entities incorporated in Argentina including branches or permanent establishments of foreign companies is 35%.

1.1.2. Taxable Base.

All revenues are subject to income tax unless otherwise excluded by law from the taxable base. Excluded Items of Income are subtracted from Gross Income. The result is the Gross Taxable Income from which all expenses incurred in obtaining taxable income are deducted. The after-deductions result is the Net Taxable Income. The Exempted Items of Income are subtracted, resulting in the Taxable Base to which the 35 % statutory corporate tax rate is applied. The result of applying the 35 % tax rate is the Resulting Income Tax from which applicable Tax Credits are subtracted to find the Income Tax Liability.

[+] Sum of All Revenues

[=] Gross Income

[-] Deductible Expenses

[-] Exempted Items of Income

[=] Net Taxable Income (Minimum Presumptive Income Tax)

[=] Taxable Base

[*] 35% Corporate Tax Rate

[=] Resulting Income Tax

[-] Tax Credits

[=] Income Tax Liability

[=] Income Tax Charge Payable

1.1.3. Deductions.

As a general rule all costs and expenses incurred in obtaining taxable income may be deducted, including organization costs, taxes (other than income tax), donations to certain entities, amongst others. The Argentine ITL includes thin capitalization rules which impose limits on the deduction of interest payments made to affiliated parties in the cross-border context. Expenses are generally allocated to the fiscal year in which they accrue.

The ITL allows for the deduction of the following concepts:

Extraordinary losses resulting from natural hazards, theft or force majeure are deductible to the extent they are not included in insurance or otherwise indemnified, provided they involve assets which generate taxable income.

Losses arising from crimes committed by employees against business property that contributes to the generation of taxable income are deductible to the extent they are not covered by insurance or otherwise indemnified.

Fees paid to resident directors are deductible to the higher of: 25% of the book earnin...

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