Argentina

Argentina

The basis of company car taxation in Argentina is reflected in this overview. Different types of taxes are considered here: taxes related to the registration of the vehicle, income taxes and VAT aspects. Expected future developments are also briefly listed, if any.

1. Car taxation

1.1. Registration tax

Taxable event

The taxable event includes the individual/Company’s purchase, importation, self-production, receiving as gift or award, or other forms of obtaining a taxable vehicle for personal-use.

Taxable person

Individual/ Company

Taxable due

Vehicle Purchase Tax payable = Market value * Tax rate (1,50% (National Vehicles) – 2% (Imported Vehicles))

Determination of market value for the initial registration:

The one that arises from the valuation table of the National Administration. When it is not possible to determine the value, and if they were new national imported automobiles or imported ones through intermediaries: the price of the good plus expenses and taxes resulting from the operation, according to the sales invoice or an equivalent document.

Taxable period

In one occasion only, at the moment of acquiring the vehicle.

1.2. Annual circulation tax

Taxable event

The registration of vehicles is taxed in the corresponding provincial territory. (Auto Registration Fee)

Taxable person

The individual or company who register a vehicle with the administrative departments of vehicles within the territory of Argentina.

Taxable basis

The valuation of motor vehicles is calculated annually according to the characteristics and the values assigned by the chamber representing the automobile insurance activity, insurance companies, specialized publications and the chamber of official dealers.

Taxable period

The payment of the tax is annual, divided in 6 bimonthly installments.

2. Income tax

• Income taxes for car industry = Taxable Income * 30%
• 30% is the standard rate in Argentina for fiscal years closed between 1/1/2018 until 12/31/2019 and 25% for fiscal years closed from 1/1/2020 onwards, while the incentive rate may apply case-by-case.

3. VAT

3.1. General

Enterprises recognized as general taxpayers are entitled to use the input tax to credit against the output tax.

• Output VAT= Sales value * applicable VAT rate.
• Input VAT= Purchase value * applicable VAT rate.
• VAT payable = (Output VAT – Input VAT)
• Standard VAT rate is 21%.

3.2. Leasing

• 21% VAT applied for car leasing business
• In "leasing" contracts that have as purpose the lease with the option to purchase the automobile, the percentage of the tax that is computable as tax credit which falls on each fee and on the price established to execute the purchase option should be recorded.

4. Company car

4.1. Income tax - Deductible expenses and Depreciation

• Deductible expenses:

ü Automobile maintenance: is deductible only up to ARS 7,200 per car for each fiscal year.

• Depreciation and amortization:

ü Annual depreciation allowances for trucks and automobiles: 20% per fiscal year.

ü Depreciation for automobiles, including those used for leasing, is deductible only up to that part of the acquisition cost not exceeding ARS 20,000 (net of VAT).

4.2. VAT – Deduction

• Input VAT is deductible only up to that part of the automobile acquisition (including leasing) cost not exceeding ARS 4,200.
• In contrast to what is provided in Income Tax, in VAT there is no limitation to the calculation of the tax credit generated by automobile maintenance expenses, as long as they are allocated to taxable activities.
• The tax credit related to leasing agreements with parking lots, garages and other similar is not computable.

4.3. Company car in personal tax returns – benefit in kind

• Benefits in kind, including travel allowances and car expenses, are fully taxable and are added to the individual’s income taxable base.
• If the Company recognizes car expenses related to the particular activity of the employees, such expenses have to be reflected in the salary receipt and are reached by the Income Tax rules.
• If they are associated to a request made by the Company and have the supporting evidence such as vouchers, they will be classified as “per diems”, not being considered as wage for the employee for the purposes of the social security and labor standards nor taxed on Income Tax.

4.4. Leasing Financial - Accelerated depreciation

• In Income Tax the deduction of depreciation is allowed in an accelerated manner, considering the validity of the leasing contract. This represents a financial advantage, since this term is generally shorter than the useful life of the automobile.
• The cap provided for the depreciation of cars of ARS 20,000 is also applicable.

5. Income taxes – drivers’ personal taxation

5.1. Private car in the personal tax return

• In relation to car expenses, when it is used for private use and to develop activities related to the Company, for the purposes of deducting Income Tax, you must estimate annually what percentage the car has been used for taxable activities.
• In the case of brokers or salespeople, you can deduct when determining Income Tax, the estimated mobility, travel and representation expenses, the tax amortization of the vehicle and, where applicable, the interest for debts related to the acquisition thereof, and up to a maximum of 40% of the non-taxable profit.
• Regarding taxis and similar vehicles, in which case the operation of automobiles is the main object of the taxable activity, the limitations regarding the deduction of depreciation and maintenance expenses do not apply.

6. Excise Tax

Taxable event

Includes the transfer and importation of automobiles and motorcycles.

Taxable person

Producers, importers and merchants.

Taxable rate

Rates vary depending on the sales value of each type of good:

Automobiles and Diesel Engines: 0% (in effect until 12/31/2018)

Automobiles:

- Up to ARS 900,000: Exempt

- Higher than ARS 900,000: 20%

Motorcycles:

- Up to ARS 140,000: Exempt

- Higher than ARS 140,000: 20%

Taxable due

Excise duties are normally calculated on the sales price as including the excise tax itself and any other tax levied on the chargeable product except VAT.

Taxable period

At the time of acquisition