Reform to Social Security System: Labor Aspects

Aspects derived from Social Security

Several amendments are made to the Social Security System:

a. Employer Contributions:

• Repeal of previous regulations:

(i)         Decrees No. 814/01 and No. 1009/01, corresponding to the employer contribution scheme, are repealed.

(ii)        Section 173 of Law 27,430, corresponding to the Tax Reform that introduced the progressive unification of the aliquots of the employer contributions for the year 2022, is repealed.

• New Tax Rates:

-           20.40%: employers from the private sector framed in “Services” or “Commerce” upon Resolution No. 220/19 of the Secretary of Entrepreneurs and Small and Medium-Sized Enterprises.

-           18%: remaining private sector employers and public sector entities and organizations (section 1, Law No. 22,016).

The aforementioned tax rates replace those previously established, but do not modify those corresponding to the HEALTH INSURANCE NATIONAL ADMINISTRATION and the National Health Insurance National Regime.

The proportion of contributions allocated to each of the subsystems of the Social Security System (Retirement and Pension Scheme, INSSJP and National Employment Fund), will be determined by the Argentine Executive ( the "PEN", after its acronym in Spanish). Until the PEN establishes this proportion, the current one will still be enforceable.

• Tax deduction based on contributions:

New amounts to be deducted over the tax base to calculate employer contributions´ are established:

- ARS 7,003.68: as general application

- ARS 17,509.20: only applicable for textile employers, primary agricultural and industrial sector, and health-related services.

For part-time contracts, these amounts would apply on a proportional basis.

The regulation also allows, for the estimation of contributions, to deduct an amount equivalent to 50% of the previous amounts, from the tax base of the Supplementary Annual Salary.

- Employers with a payroll of up to 25 employees may deduct an additional amount of ARS 10,000.

b. Regularization of obligations for Micro, Small and Medium-Sized Enterprises:

- A regime to regularize tax, social security and customs obligations is established for those companies that certify their registration as Micro, Small and Medium-Sized Enterprises.

- For this purpose, the Law establishes that obligations expired as of November 30, 2019, inclusive, and infractions related to such obligations can be regularized.

- This regime provides for important benefits such as remission of interests, fines and penalties, discounts for cash payment, payment facilities regime.

 

Labor Aspects:

a. Small and Medium-Sized Enterprises:

•           Release of fines and sanctions:

The release of fines and sanctions will mean the withdrawal of the employer's registration from the Public Registry of Employers with Labor Sanctions (the “REPSAL”, after its acronym in Spanish).

b. Faculties of the Argentine Executive The Law authorizes the Argentine Executive  to:

 

•           Salary Increases: The PEN may mandatorily require  private sector employers to pay minimum wage increases to their employees. Consequently, certain salary increases could be ordered by the national president through decrees.

•           Payment of Withholdings and Contributions: The PEN is authorized to temporarily exempt from the obligation to pay social security withholdings and contributions, over the salary growth provided by the PEN within the framework of the aforementioned decrees, or salary increases that arise after collective bargaining negotiations.

•           Reductions in Withholdings and Contributions: The Law authorizes the PEN to make reductions in employer contributions and/or personal contributions to the Integrated Argentine Pension System created by Law No. 26,425, limited to specific jurisdictions and activities, or in critical situations.