Overview Argentina

Argentina

Argentina is a member of the free trade agreement Mercosur which enables a largely custom-free exchange of goods with Brazil, Paraguay and Uruguay. Associated members of the agreement are Bolivia, Chile, Ecuador, Peru and Colombia. Furthermore Argentina has a harmonized custom´s system in line with the Brussel`s nomenclature. The duty rates are between 0% and 35% and are being calculated based on the CIF value.

For investors Argentina is particularly relevant because they are being awarded virtually the same rights as national investors. Furthermore, an investment protection agreement has been established with Germany in 1993. The agreement affords a far-reaching protection against expropriation as well as improved rights with view to profit and capital repatriation as well as conflict resolution mechanisms.

Argentina`s membership in the Paris Convention for the Protection of Industrial property also grants the protection of intellectual property.

 

e-Invoicing

In 2007 the e-Invoicing process was introduced in Argentina and became mandatory for all companies in 2015. The institution responsible for the e-Invoicing is the AFIP (Administracion Federal de Ingresos Publicos). The e-Invoicing system is based in a XML file that is comprised of specific tax data as well as an electronic signature to verify its authenticity. In order to generate this signature the companies sending the invoice need respective electronic authorization codes (CAE). Without them the goods cannot be shipped and the invoice remains invalid. The e-Invoicing is especially relevant for Type E export invoices as well as national Type A and B invoices.

Regardless of the type of invoice companies have to maintain a valid digital certificate  (CFD, Certificado Fiscal Digital)  which needs to be registered with the AFIP. This registration takes up to 30 days and is carried out through a fiscal key (Clave Fiscal) or a password using the AFIP-website. All official documents (invoices) carry ongoing numbers. In case an invoice encounters a problem this needs to be solved in order to issue and verify the following invoices.

 

Process

Generate XML file
The sender of the invoice generates an XML file including all tax information that are needed for the e-Invoice. In order to verify the authenticity of the information as well as the identity of the sender the file needs to be validates through a digital signature as well as an electronic authorization code (CAE).

Invoice Authorization
Using different communication channels (Web Service, RECE, Online Invoices Service-Comprobantes en línea) the e-Invoice can be issued and will be authorized by the AFIP in real time.

 

Compliance

While in 2015 Argentina only placed 107 out of 180 countries in Transparency International`s Corruption-Perception-Index, in 2017 the country could advance up to rank 85 which places it right after LATAM-neighbor Chile. This development can be attributed to the strong focus on the fight against corruption in the LATAM-countries which since 2014 has significantly increased and has been based on respective new legislative laws. Therefore, most companies are legally required to implement compliance programs.

In 2000, Argentina has already ratified the OECD Convention against Corruption as well as accepted London`s Anti-Corruption Summit`s goals  in 2016. Currently, the Macri government is creating a new draft law whose core elements correspond to Argentina`s wish to gain full OECD membership:

  • corporate liability and asset recovery in cases of corruption
  • increased transparency regarding public information
  • benefits for companies that support the legal institutions in investigating cases of corruption
  • the existence of an effective compliance program is recognized as a mitigating factor in case of sanctioning

Apart from the new legislation – inspired by Brazil`s Lava Jato processes – investigations against more than one hundred big companies have started. First sanctions both against companies and individuals have been imposed.

In Argentina, apart from the general guidelines (link) the following concrete elements need to be included into an effective compliance program:

  • Adaption of international compliance programs to country-specific requirements
  • Third-party contractors pose the biggest risk of corruption wherefore special attention needs to be put towards due diligence and training of employees that interact with them
  • Training regarding the handling of whistleblowers and internal investigations (interview techniques, reporting, legal aspects)
  • Evaluation, if corruption incidents lead to further legal violations (custom`s law, tax law, document fraud)Not all measures of this comprehensive catalogue of measures need to be implemented right away. However, an effective compliance program needs to be established within five years from now. Given that more and more companies implement respective programs compliance is likely to develop into a best practice requirement which will be expected even from companies that are not yet legally required to use one.

 

Criterium Argentina
Legal basis Draft law
Compliance program duty? yes
Standards The compliance program has to be:

 

·         Risk-based

·         Adapted to the size and activities of the company

·         Prevent, uncover, correct violations

 

+ general guidelines (Verlinkung LATAM-Artikel)

Compliance program as mitigating factor? yes
Sanctions Penalties up to 200%  of the gained advantage

 

 

Tax law & Taxes

Argentina levies taxes on the country, state and municipal level. In order to avoid multiple taxation a double taxation agreements has been established with Germany in 1978. The agreement protects German companies against Argentina`s high withholding tax.

Argentina`s tax legislation consist of altogether 19 tax laws which are being monitored by the tax authority Administración Federal de Ingresos Públicos (AFIP). The following tax laws are most relevant to companies:

  • Income Tax Law
  • VAT Law
  • Tax Procedures Law

The following taxes are most relevant to companies with subsidiaries in Argentina:

 

Tax type Tax base Rate
Country Level Taxes
CIT

(Impuesto a las Ganancias)

 

Total income including capital gains 30 % in 2018 und 2019 (25 % from 2020)*, Advance payments based on previous year
Tax on assumed Minimum Income

(Impuesto a la Ganancia Mínima Presunta – IGMP)

 

All Argentinian companies or foreign subsidiaries of Argentinian companies with more than 200.000 Argentinian Pesos 1%, charged against corporate tax
Property Tax 

(Impuesto sobre los Bienes Personales)

 

Natural persons as well as foreign companies holding shares of Argentinian companies Assets in excess of tax exempt amount of 950.000 Argentinian Pesos à 0,25 % (since 2018)
Real Estate Transfer Tax

(Impuestos a la Transferencia de Inmuebles de Personas Físicas y Sucesiones Indivisas)

 

Transfer of real estate 1,5%
VAT

(Impuesto al Valor Agregado IVA)

 

Goods and services general: 21 % reduced:10,5 % (certain foods, financial transactions and services)

increased: 27 % (electricity, water, gas – if not used for living space)

Tax on Debits and Credits

(Impuestos a los Débitos y Créditos en Cuentas Corrientes)

 

Debits and credits 0,6 % of total value

 

Municipal Taxes
Gross Revenue Tax

(Impuesto sobre los Ingresos Brutos)

 

Commercial tax and services 1,5-4% depending on service an municipality
Propety Tax

(Impuesto Inmobiliario)

Real estate depending on municipality
Stamp Tax

(Impuesto de Sellos)

Contracts and certificates 1%

* People and companies residing in Argentina are taxed based on their world income while taxes paid abroad are being offset against duties in Argentina. People and companies residing abroad are only taxed based on the income they generated in Argentina.

In January 2018 a new tax reform (Decree 1112/2017) has been issued that is supposed to incentivize foreign investments, boost competition and modernize Argentina`s tax system. The following taxes that are particularly relevant to companies are subject to changes:

  • Reduction of corporate tax for 2018/19 to 30%, from 2020 to 25%
  • Withholding tax for dividends from 7% for 2018/19 to 13% from 2020

An explanation of all relevant technical and tax terms is available here.