Income Tax Law Amendments

Deferral of adjustment for inflation income and losses

 

The Law of Social Solidarity and Productive Reactivation (the “Law”) maintains the application of the adjustment for inflation procedure establishes by Section VI of the Income Tax Law (ITL).

 

The income or loss arising from the adjustment for inflation procedure corresponding to the first and second fiscal period beginning as of January 1, 2019 must be proportionally allocated in a six-year period, instead of the three years according to current regulations.

 

Suspension of the reduction of the Income Tax rate for companies

 

The Law suspends, until fiscal years starting from  January 1, 2021 the application of 25% income tax for rate companies and 13% withholding tax on payment of dividends and profit distributions. Therefore, a 30% income tax rate for companies and the 7% withholding tax on payment of dividends and profits distributions is maintained.

 

Increase on non-taxable income amount and the special deduction for those who have a public service position, dependent workers, retirees, and pensioners

 

The Law increases non-taxable income amount and the special deduction for those who have a public service position, dependent workers, retirees, and pensioners for the period 2019. Such taxpayers may deduct from the taxable base an amount equivalent to the amount established by Section 1 of Decree Nº 561.

 

Decree N° 561 stated that the Argentine Tax Authority must reduce the base calculations of withholdings, by an amount equivalent to 20% of the amounts contemplated in Income Tax Law, as a special deduction and non-taxable income, on:

a) The amounts received by national, provincial, municipal and City of Buenos Aires public service workers;

b) The amounts received by employed workers; and

c) The amounts of retirements, pensions, withdrawals or subsidies originated from personal jobs that have been subject to the payment of the tax, including cooperative society advisors.