Argentina – Income Tax Calculations Are Changing

Changes for 2023

Until September of the current fiscal period, the calculation was carried out as follows:

According to salary level, the taxable population was divided into three sections:

• without withholding tax (salaries up to ARS 700,875 in September);
• with withholding, but incremental deductions (salaries between ARS 700,875 and ARS 808,341 in September);
• No additional benefits (salaries exceeding ARS 808,341 in September).

Then, all income and deductions up to September were accumulated and tax was calculated with the rates of the corresponding month (marginal rate 35 percent). In most cases, the third group that was included for income tax calculations had been paying at the marginal rate.

For October-December 2023 period:

According to salary level, the population is divided into two sections:

• If the monthly gross income is less than 15 federal minimum wages (ARS 1,980,000): No tax withholding.
• If the monthly gross income is higher than 15 federal minimum wages (ARS 1,980,000): Accumulate earnings since October.

The monthly income tax scale to be considered was also updated to reflect the increases in the salary amount basis. The marginal rate remains 35 percent, but for different amounts.

Changes for 2024

Law 27,725, approved by the Senate on September 28, establishes important new changes for the taxability of earnings derived from labor relationships, retirements, and pensions in FY 2024.² Local-source earnings will be considered independently for the income tax calculations.

“Cedular” Tax for those who receive "higher income": It is calculated and determined independently, it will not be added with other income that an individual may obtain (e.g., if they obtained a rental property) and the withholding that is determined in this way will be final.

What is “higher Income”? Defined in the Income Tax Law as a) performance of an employee for a public office with the exception of the judiciary, deputies, senators, and some others as indicated; b) personal work in a dependent relationship with the exception of directors and equivalent administrative positions; and c) retirements, pensions.

From what amount is such higher income taxable? Where an individual obtains higher income for an amount greater than 180 federal minimum wages annually (SMVM), he or she will be taxable. Calculated at the federal minimum wages value of December 2023, the amount is equivalent to ARS 28,800,000.00 annually / ARS 2,400,000.00 monthly.

Tax Scale: Tax rates vary between 27 percent and 35 percent and are applied to amounts determined in terms of federal minimum wages (the tax scale), which will be updated in January and July of each fiscal year. (For more information on Argentina’s tax system, see Taxation of International Executives: Argentina, a publication of KPMG International.)

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