Is your company looking to gain access to natural resources in an emerging nation? Argentina is a great place to start. Not only does it possess a stable economy, it is also a gateway to other South American and Latin nations.
Ease of Doing Business in Argentina: An Overview
Argentina is labeled an emerging market, with steady GDP development and growing businesses. It is an agricultural nation with large amounts of natural resources. Additionally, their economy specializes in automobiles and tourism. Argentina’s economy and government are decently stable, making it a great place for global businesses to expand.
Argentina uses the Argentinian Peso (ARS). 1 ARS is worth .017 USD. That means that 1 USD is worth 59.77 ARS. American employers find that their money goes farther in Argentina’s economy. It also allows companies greater access to mined natural resources.
Recent Developments in Argentina’s Payroll Laws
The most significant update to labor laws affecting employee payroll pertains to Argentina’s standard deduction cap. In 2019, the employee deduction increased by 20% from ARS 412,075.15 to 494,490.17.
As a general rule, Argentinian employers are expected to treat their employees well. And even though pay in Argentina is surprisingly low (compared to USD), the cost of living is also very low.
Basic Facts about Payroll in Argentina
Many South American economies run payroll similarly. For example, Argentina is one of several countries on the continent that pays 13-month salaries for the benefit of employees. Taxes are withheld monthly, as well as social security (health insurance and pension).
Incomes and cost of living are notably low in Argentina (as is the case for a lot of South American economies). That being said, employees pay an income tax, as well as social security that includes a state-managed pension fund and health insurance. There are no payroll taxes in Argentina.
Rates and Thresholds
Income taxes begin at 5% for incomes up to ARS 33,039.81 (552.80 USD). As incomes rise, taxes start at a base tax with an additional excess tax at a specific percentage. For example, there is a tax of ARS 4,625.57 on ARS 66,079.62, with an additional 12% in excess of that amount. The highest tax rate is ARS 117,952.11 on ARS 528,636.91, and an excess tax of 35% for any amount above ARS 528,636.91.
For more information, see tax rate chart below.
How Withholding Works
These taxes are typically withheld mid-month from an employee’s paycheck, which may be distributed on either a monthly or weekly basis. There are no payroll taxes. Also, employers contribute toward the government’s social security program.
Returns and Tax Credits
If an employee still owes taxes at the end of the year, they must pay it by June 15 of the following tax year.
Employee Stock/Share Plans
When it comes to employee stock/share plans, the Argentinian government does not require or place limitations on employers. Typically, only those that occupy high-level positions receive equity. However, international companies have opened up equity to non-executive Argentinian employees.
Failure to pay taxes owed by the end of tax season results in interest and penalties. The government typically imposes a 3% interest rate on taxes owed, plus a financial penalty worth up to twice the amount of taxes owed.
Tax Rate Chart
|USD Comparison||Income Range||Income Tax Rate|
|$0 – 552.80||ARS 0 – 33,039.81||5%|
|$552.81 – 1,105.61||ARS 33,039.82 – 66,079.61||ARS 1,651.99 on ARS 33,039.82 / 9% on excess|
|$1,105.62 – 1,658.41||ARS 66,079.62 – 99,119.42||ARS 4,625.57 on ARS 66,079.62 / 12% on excess|
|$1,658.42 – 2,211.21||ARS 99,119.43 – 132,159.23||ARS 8,590.35 on ARS 99,119.43 / 15% on excess|
|$2,211.22 – 3,316.82||ARS 132,159.24 – 198,238.84||ARS 13,546.32 on ARS 132,159.24 / 19% on excess|
|$3,316.83 – 4,422.42||ARS 198,238.85 – 264,318.45||ARS 26,101.45 on ARS 198,238.85 / 23% on excess|
|$4,422.43 – 6,633.63||ARS 264,318.46 – 396,477.68||ARS 41,299.76 on ARS 264,318.46 / 27% on excess|
|$6,633.64 – 8,844.85||ARS 396,477.69 – 528,636.91||ARS 76,982.75 on ARS 396,477.69 / 31% on excess|
|$8,844.86+||ARS 528,636.91+||ARS 117,952.11 on ARS 528,636.91 / 35% on excess|
*Chart above does not include social security contributions or the .25% wealth tax on incomes above 1,050,000 ARS.
Compensation and Benefits
Like many South American countries, employees are paid salaries based on 13 months. This means that employees receive one-month’s additional salary every year. Employers pay half the 13-month’s salary in the middle of the year and the other half at the end.
The government sponsors social security for employee, and it includes healthcare and a pension.
Argentina’s minimum wages are set at ARS 6,060/month. This amounts to ARS 78,780 annually (this includes the 13th month extra salary).
Overtime is granted for those that work up to 48 hours/week (above the normal 44-hour workweek). Employees working overtime are paid time and a half during the day and double pay during the night.
Hours of Work
The standard workweek varies by industry and shift times. Regular daytime hours are no more than 44 hours/week (before that employee receives overtime), 8 hours/day. Night shift workers are limited to 42 hours/week before overtime, and those working under dangerous conditions are limited to 36 hours/week. Generally, it is not appropriate to make employees work on Sundays or in the afternoon on Saturday.
Holiday & Leave
Paid vacation entitlements begin for employees that have worked for their employer a minimum of 6 months. The longer an employee remains with their employer, they are granted more paid leave. For tenure under 5 years, employers are granted a minimum of 2 weeks. This increases after 5 years to 3 weeks and then again after 10 years to 4 weeks. Employers may choose to grant their employees paid leave above the legal standard if they prefer.
Pregnant women (and new mothers) are protected by Argentina’s labor laws. They must be given a minimum of 90 days maternity leave (45 days before birth and 45 days after). Further, if a new mother is terminated within 7.5 months before or after birth, the employer can be prosecuted for discriminating against the mother for being pregnant.
How Employees File Taxes at the End of the Year
Employees must file their taxes by June 15 the following year. If they still owe taxes after withheld income during the year, they must remit payment when they file their return or risk heavy penalties and interest rates.
While Argentina usually approves work visas liberally, the process for a work visa is fairly complicated. Experts recommend that foreign workers begin working with their new employers for a work visa at least a month and a half before arriving in the country. Along with standard identity verification documents, foreign workers must present a PIM (entry permit), along with a police record and a hiring contract from the employer.
For more information about how our Global Payroll Technology integrates with local payroll providers in Argentina, contact us today