Fiscal consensus reached by the federal government, the provinces (except San Luis) and the Autonomous City of Buenos Aires saw the enactment of Law No. 27,429 (the Fiscal Consensus Law) on December 22, 2017. The bill’s objective is to implement tax policies designed to promote and increase investment, as well as private employment, through a reduction in the fiscal burden of taxes with distortive effects on overall economic activity. The obligations assumed by local jurisdictions are summarised below.

Tax on Gross Income 

1. The elimination of differential treatment for industrial businesses established in different provinces. In recent years, most provinces have demanded that firms be settled within their territory in order to enjoy tax exemptions or reductions. With this measure, industrial activities conducted by a company established in another province will be treated in a similar way to one in the jurisdiction.

2. The establishment of exemptions and the application of rate ceilings according to a schedule of activities and period of time. This obligation seeks to lower the tax burden on different stages of industrial and financial production to avoid the accumulation effect on taxes that are replenished via pricing in the latter stages of the commercialisation of goods.

3. Making tax exemptions on exports, except those related to mining. To this end, taxes on exports were forbidden as of January 1, 2018. The services must be deferred before December 31, 2019.

4. The adaptation of collection regimes. For a number of years, the provinces anticipated collection through withholdings/payments. These generally exceeded the tax obligation, resulting in tax balances in favour of the taxpayer. Provinces are now obliged to avoid excess payments, and, in the event that they occur, see that the balance is refunded in an expeditious manner.

Stamp Tax

This is an old instrumental duty that is not used in modern states, but each province in Argentina has the ability and the power to collect it. The obligations assumed are as follows: 1. To not increase quotas for real estate transactions, the purchase and sale of motor vehicles, or hydrocarbon activities; and 2. To establish maximum quotas for other taxable activities according to the following schedule:

• 0.75% in 2019;

• 0.5% in 2020;

• 0.25% in 2021; and

• Total elimination from 2022 onwards.

Real Estate Tax

This is a direct assets tax collected by provinces and municipalities, with large normative disparities existing among them. The new law requires the adoption of uniform methodologies for fiscal valuations, as well as the setting of quotas of between 0.5% and 2% of the asset value.

Other Taxes

Regarding income tax, this is levied on persons and undivided estates, as well as non-resident beneficiaries with investments in government securities and other financial assets. The new configurations are listed in the table (see page left).

Meanwhile, corporate taxes will see a gradual reduction for companies that do not distribute profits, as per the table (see page left).

In terms of value-added tax (VAT), digital services are now considered subject to this duty. The reform also provides for the swift recovery of the VAT value locked up in assets.

Of utmost importance is the reduction of social security contributions. The minimum taxable amount not subject to contributions is adjustable to account for consumer prices and will reach AR12,000 ($621.36) over a period of five years as below:

• AR2400 ($124.27) in 2018;

• AR4800 ($248.54) in 2019;

• AR7200 ($372.82) in 2020;

• AR9600 ($497.09) in 2021; and

• AR12,000 ($621.36) from 2022 onwards.

Municipal Taxes

In Argentina there are more than 2000 municipalities with the power to impose taxes on services such as security, hygiene, public lighting and advertising.

The new legal norm obliges municipalities to adapt levies on the provision of services provided to taxpayers, with the quantification of these fees to be based on the cost of the relevant service.

This is a substantial paradigm shift because most of the municipalities charged companies a rate based on the amount of sales made, meaning there should be a significant reduction in the tax burden.

In addition, the derogation of any tax on payroll is obligated in order to reduce labour costs. Given the likely proliferation of rates with different characteristics, a base will be promoted by individual provinces that unifies the facts, taxable bases, subjects and quotas.

National Taxes

Congress is not obliged to create new national taxes on assets, or increase the tax rate on personal assets.

New Scenario

The pressure generated by local taxes has increased significantly over the last decade, weighing on economic activity. The Fiscal Consensus Law imposes a new tax scenario with the aim of attracting investments with a multiplying effect on the economy and employment.

The reduction of the tax burden in the provinces and municipalities is no longer merely an expression of will; the Fiscal Consensus Law passed by Congress makes it a reality. The responsibility of the federal government is to strictly enforce the new obligations assumed by the provinces and municipalities.

It should be understood that fiscal federalism exists in Argentina, whereby tax powers are assigned to the federal government, provinces and municipalities (the three levels of government). This situation led the government to seek an important consensus with governors to eliminate the distortions caused by local taxes – both provincial and municipal – given that in the previous decade these administrations had significant scope to levy new taxes to finance their spending. As a result, the new framework has been rolled out with the aim of reducing local tax pressure by 2.5% of GDP over the next five years.

Improving Competitiveness

In 2015 the government inherited an extremely complex financial landscape characterised by high tax pressure – generated by distorting taxes that damaged economic activity – and a wide fiscal deficit. The first measures undertaken to ameliorate this targeted a gradual reduction in tax pressure. To this end, taxes that affect the competitiveness of exports, with the exception of soy, will be eliminated over a staggered timeline. Likewise, personal deductions will increase for salaried and self-employed workers who suffer from non-taxable minimums and tax rates affected by inflation. This will result in a decrease in fiscal pressure equivalent to 2% of GDP.

In this sense, the tax reform proposed and approved at the end of 2017 is the most important of the last 30 years. The reform is comprehensive, with more than 300 articles laid out with the aim of engendering a fair and equitable tax system. At the same time, it seeks to achieve a substantial improvement in competitiveness via reduced fiscal pressure, estimated at 1.5% of GDP over the next five years.

The harmonisation of the tax system, alongside the reduction of fiscal pressure, seeks to attract investments, create jobs, and boost economic activity.


With a more competitive tax system achieved via the elimination of distorting taxes, Argentina is now better positioned to attract investment. For this to happen in practice, the proper implementation of the new rules is a must.