The proposed bill would increase tax rates on large entities by replacing the current fixed tax rate with a progressive tax scale. It would also extend the 7% withholding tax on dividends from profits accrued in tax years beginning January 1, 2018, to dividends from profits accrued in tax years beginning January 1, 2021 and thereafter.

On March 11, 2021, the Argentine Executive Power circulated a bill that it plans to send to Congress that would increase corporate income tax rates for tax years beginning January 1, 2021 and onwards.

Characteristics of the bill

The bill would replace the 25% fixed tax rate currently in effect with a progressive tax scale with the following ranges for tax years beginning January 1, 2021:

• For accumulated net taxable income up to ARS 1,300,000 (approx. USD 14,400): 25% tax rate on net taxable income
• For accumulated net taxable income from ARS 1,300,001 to ARS 2,600,000 (approx. USD 28,800): ARS 325,000 (USD 3,600) plus a 30% tax rate on accumulated net taxable income exceeding ARS 1,300,000.
• For accumulated net taxable income exceeding ARS 2,600,000 (approx. USD 28,800): ARS 715,000 (approx. USD 7,900) plus a 35% tax rate on accumulated net taxable income exceeding ARS 2,600,000.

The new tax rates also would apply to permanent establishments in Argentina as defined by the income tax law.

The bill also would allow the ranges of net taxable income to be adjusted annually beginning January 1, 2022, considering the annual variation as of October of the previous year of the consumer price index (IPC for the Spanish acronym) provided by National Statistics and Census Institute (INDEC), an agency of the Ministry of Economy.

In addition, the bill would permanently extend the 7% withholding tax rate currently in force for dividend distributions from profits accrued in tax years beginning January 1, 2018, to dividend distributions from profits accrued in tax years beginning January 1, 2021 and onwards.

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