Comparative Guides

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4. Results: Answers
Corporate Tax
Indirect taxes
What indirect taxes (eg, goods or service tax, consumption tax, broadcasting tax, value added tax, excise tax) could a corporate taxpayer be exposed to?

Answer ... Value added tax (VAT): This tax applies to the sale of goods located in Argentina, the provision of services in Argentina and the import of goods into Argentina. Under certain circumstances, services rendered outside Argentina which are effectively used or exploited in Argentina are deemed rendered in Argentina and are therefore subject to VAT.

VAT is levied at each stage of the production or distribution of goods or services on the value added during each stage. Thus, this tax does not have a cumulative effect.

The tax is levied on the difference between the so-called ‘tax debit’ and the ‘tax credit’. If this difference is positive, it constitutes the amount to be paid to the Argentine Tax Department.

Turnover tax (tax on gross income): Turnover tax is a local tax levied on gross income. Each province and the City of Buenos Aires apply different tax rates to different activities.

The tax is levied on the amount of gross income resulting from business activities carried on within the respective local jurisdiction.

As each jurisdiction is empowered to set this tax as it sees fit, as a general principle, in each jurisdiction in which activity is undertaken the specific features from turnover tax may vary (eg, the tax rate).

If a company is active across numerous jurisdictions (eg, various provinces and the City of Buenos Aires), the terms of the Multilateral Agreement (Convenio Multilaterial) shall apply. This agreement aims to avoid difficulties arising from the application of this tax and allows for a single tax payment to be made which is then distributed among the relevant provinces.

For more information about this answer please contact: Francisco Blanco from JP O'Farrell Abogados S.A.
Are transfer or other taxes due in relation to the transfer of interests in corporate entities?

Answer ... The amount of the transfer will be subject to income tax, but otherwise there is no special tax applicable to the transaction.

The tax rates varies depending on who is selling its interest:

  • In the case of a local company, it is considered income and consequently is included in the income tax return; and
  • In the case of an individual (foreign or local) or a foreign company, the tax rate is either:
    • 15% of the difference between the cost of acquisition and the sale price; or
    • 90% of the selling price.

For more information about this answer please contact: Francisco Blanco from JP O'Farrell Abogados S.A.