23. Taxes on Payrolls (Social Security)
The main social security rates levied in Argentina are:
Employer Employee
Contributions Withholdings
Pension fund 18% 11%
National Pensioners?Institute ?3
Family Subsidy Fund 7.5 ?
Unemployment Fund 1.5 ?
Health Scheme 6 3
33% 17%
All of the above percentages are payable on salaries up to a ceiling of $4,800 per month.
The obligatory legal bonus of one month salary per year is
subject to similar contributions and withholdings.
Employer social security contributions were granted an abatement of 30% or more for some time, on condition of compliance with tax regulations and depending on the jurisdiction involved. Thus, for example, in the city of Buenos Aires, employer contributions currently total 23.9%, rather than 33% as shown in the above table.
Personnel engaged abroad to work in Argentina for not longer than two years may apply for exemption from the employer contributions and employee withholdings.
24. Taxes on Natural Resources
Exploitation of Oil and Gas Resources. In explaining the taxes applicable to businesses engaged in oil and gas exploration, extraction, and operation, it is necessary to distinguish among: 1) the holders of exploration permits and operating concessions taxed in accordance with Law 17,319 of 1987; 2) companies that enter into risk Contracts for the Exploration and Exploitation of Hydrocarbons,?covered by Law 21,778 enacted in April 1978; and 3) companies that are granted the right to exploit, explore, and develop given areas pursuant to Law 17,319 but within the special conditions arising from Law 23,696 enacted in 1989 (the State Reform Law) and various decrees issued in 1989 and 1990.
The special tax system envisaged by article 56 of Law 17,319 included a special income tax (55% of the profits obtained), against which taxpayers could credit the amounts paid in respect of the fixed charge per square kilometer, oil and gas royalties, and provincial or municipal taxes. Nevertheless, in practice this tax system has hardly been applied.
The tax system applicable to risk contracts,?which is governed by Law 21,778, entails the application of the general tax rules, coupled with such special benefits as the possibility of taking up 100% depreciation for the value of certain depreciable assets used for exploration purposes in the first year they are put into service. It should be mentioned that under the system of Law 21,778 the contractor does not acquire the right of ownership to the oil and gas extracted even though its compensation is fixed on the basis thereof.
The concessions granted latterly, which are based on Law 17,319 and the series of decrees issued in 1989 and 1990, specifically exclude the application of the special 55% tax envisioned by that law and declare that the awardees are subject to the general tax rules. Incidentally, these adjudications specifically call for the concessionaire to pay the State a fixed charge per square kilometer and a 12% royalty on the wellhead value of the production computed (which may be reduced if the operation is not profitable) and grant the concessionaires the right to dispose freely of the oil and gas produced.
25. Other Taxes
Land and Property Taxes. Land and property taxes are levied by the provinces and the city of Buenos Aires Federal Capital, based on the assessed valuation of the property. Rates vary from one jurisdiction to another.
Wealth Tax (Tax on Personal Assets). Individuals domiciled in Argentina (excluding foreigners whose residence for work purposes is less than five years) are subject to this tax on their worldwide assets.
Individuals domiciled abroad pay the tax only on assets they hold in Argentina. On an exceptional basis, certain assets located in Argentina that belong to foreign companies also are taxed under a legal assumption described below.
q Individuals domiciled in Argentina. Virtually no exemptions exist effective 1995. The principal exemption still remaining is that aimed at abiding by exemptions formerly granted in connection with the issuance of government securities and negotiable bonds. Such government securities and negotiable bonds continue to be exempt if they were acquired or included in the taxpayer assets prior to the implementation of Law 24,468 of 1995.
The 0.5% tax is levied on the difference between the total value of the taxpayer assets on each December 31 and a nontaxable threshold of
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