The general guidelines of a comprehensive tax reform plan (the Plan) were announced by Minister of Economy Nicolas Dujovne during a press conference. The implementation term of the Plan is expected to be between 1 and 5 years.
The Plan will have to be discussed and approved by the National Congress, and covers different taxes and procedural aspects. The issues covered by the Plan are detailed below.
1. Income Tax
1.1. Corporate Income Tax: The rate is reduced from 35% to 25%, creating a 10% dividend tax. As a result of this, corporations that reinvest their earnings instead of distributing dividends would be benefited by a 10% reduction of its final tax burden.
1.2. All Tax on Debit and Credits payments will be considered as an advanced payment of Income Tax.
1.3. Anti-avoidance rules are amended to align them with OECD rules.
1.4. Tax on the Transfer of Real Estate (ITI) is abrogated; acquisition and sale of real estate is now subject to Income Tax at a 15% rate.
1.5. Certain securities that are currently exempted from taxes (e.g. bonds issued by the Federal Government) will be subject to tax under the Plan, as follows: (a) securities denominated in foreign currency or indexed and other financial profits: 15%, (b) securities denominated in national currency: 5%; such rate can be increased by the Federal Government up to 15%, (c) stocks listed locally will remain exempted.
1.6. Special deductions that granted a preferential Income Tax treatment for certain groups of workers are abrogated.
2. Value Added Tax
2.1. The Plan creates a VAT refund procedure for the reimbursement of VAT credits arising from investments made by taxpayers, when such credits were not be used within 6 months after the investment was made.
2.2. The VAT taxable base is broadened to include digital services provided by foreign companies (download of videos, games and other contents).
3. Transfer Pricing
3.1. The Mutual Agreement Procedure (MAP) is regulated.
3.2. Advanced Transfer Pricing Agreement (APA) are implemented as local regulations.
4. Independent workers taxes
4.1. The amount of the special deduction for independent (autonomos) workers is doubled.
5. Social Security contributions made by employers
5.1. An AR$12,000 gross salary is established as the minimum non taxable amount for the payment of social security contributions made by employers (contribuciones patronales).
5.2. The applicable social security contributions rate for the private sector is unified in 19.5%; this amendment is expected to be implemented gradually.
6. Other Taxes
6.1. Tax on fuels is simplified in order to align it with current environmental regulations and agreements.
6.2. Amendments to Excise Tax; the rate is reduced to 0% for televisions, cell phones and screens.
7. Provincial Taxes
7.1. The Federal Government will negotiate agreements with provincial governments to reduce the rates of Gross Receipt Tax, Stamp Tax and other provincial taxes.
8. Criminal Tax Law
8.1. Criminal Tax Law amounts are updated.
8.2. The Plan establishes that under certain circumstances, the Government may be exempted from filing a criminal complaint.
9.1. An administrative settlement procedure is created.
9.2. A mechanism for the permanent update of the value of fixed amounts included within tax laws is also created.