Employers´ social security contributions in Argentina after the emergency law

by 9 Feb 2020Companies, Doing business in Argentina, Labor and Social Security, Labor and social security

Updated on 7/12/2021

Labor costs in Argentina have changed after the emergency declared by Law No. 27,541 on Social Solidarity and Productive Reactivation in the Framework of the Public Emergency[1], and its Regulatory Decree No. 99/19. These regulations introduced significant legal changes, including those related to social security contributions in Argentina which we will briefly review below.

1. Employer contributions for the single social security system

a) Rates

The employer’s contributions for the single social security system to be calculated on the gross salary of each employee are currently as follows[2]:

(i) 20,4% for employers belonging to the private sector whose main activity is in the service or commerce sector in accordance with the provisions of Resolution No. 220/2019 of the Secretariat of Entrepreneurs and Small and Medium-Sized Enterprises and its amendments, provided that their total annual sales[3] exceed, in all cases, the limits for classification as a medium-size enterprise section 2[4], except those included in Laws Nos. 23,551 (Trade Union Associations), 23,660 and 23,661 (Social Works); and

 (ii) 18% for the remaining employers belonging to the private sector not included in the previous category, and for the public sector entities and agencies included in Article 1 of Law No. 22.106.

Employer’s contributions for the hiring of transvestites, transsexuals, and transgender individuals may be taken as payment on account of national taxes. This benefit is valid for a term of 12 months as from the execution of the employment contract. In the case of micro, small and medium-sized companies the term will be extended to 24 months (Law No. 27,636, Article No. 11). The federal government must prioritize, at equal cost and in the manner established by regulation, the purchase of inputs and supplies from legal entities or individuals within the private sector that include transvestites, transsexuals, and transgender persons in their workforce (Article No. 12).

b) Non-taxable minimum

From the taxable base on which the contribution rates are applied, a fixed amount of AR$ 7,003.68 shall be deducted monthly per worker.

For employers in the textile, clothing, footwear and leather goods, agricultural and industrial primary and health services sectors, and for employers who are concessionaires of public services, to the extent that at least 80% of the share capital of the concessionary company belongs to the national State, the deduction is AR$ 17,509.20.

The deduction may not result in a taxable income less than the minimum limit of the social security base provided for in Article 9 of Law No. 24,241[5].

In addition, employers with up to 25 workers will enjoy a deduction of AR$ 10,000 per month on the total taxable base, after the previous deductions are computed, until it is exhausted, without the surplus being able to be transferred to future periods.

Up to now, no adjustment of these fixed amounts of deduction has been foreseen.

The additional items to be contributed by employers for personnel included in the Construction Industry Regime (Law No 22,250) must be applied to the corresponding taxable base without making the above-mentioned deductions.

c) Calculation as a tax credit for VAT

Depending on the location of the employee, a specific percentage of the employer contributions effectively paid may be offset against the employer’s VAT liability in its monthly VAT return.

d) Validity.

The new regime of employer contributions to the social security system came into effect for obligations accrued in December 2019.

2. Employer contributions to welfare entities

They remained unchanged and are still at 6%.

Mario E. Castro Sammartino

[1] Published in the Official Gazette on December 23, 2019, effective as of the same day of publication.

[2] These contributions to the social security system are allocated to different subsystems: (National Institute of Social Services for Retirees and Pensioners, National Employment Fund, Argentine Integrated Social Security System and Family Allowances)

[3] The total annual sales will be calculated following the provisions of Article 5 of the aforementioned Resolution No. 220.

[4] For this limit, the regulations established that the annual sales cap set out in Annex IV of Resolution No. 220/19 (AR$ 607,210,000 and AR$ 2,146,810,000 for Services and Commerce activities respectively) must be considered in all cases.

[5] Resolution No. 279/2019 of the National Social Security Administration established such minimum monthly taxable base of AR$ 4,893.25 as from the period accrued December 2019.

 

For additional information on these or any other issues related to doing business in Argentina, please, sign up for our Legal Blog or contact us at any time. Our publications exclusively express the author´s opinion and do not purport to be legal counsel on any case. Should you need it, you must consult with your trusted lawyer.​

 

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