With strong worker protections and labor unions, Argentina can initially seem like a tough country in which to do business. It ranks 121st on the World Bank’s Ease of Doing Business because of various difficulties concerning taxes, exemptions, and delays. If you decide to set up a subsidiary in Argentina, you first need to understand local employment laws regarding payroll, payroll processing, and your options for outsourcing or setting it up yourself.
Taxation Rules in Argentina
After setting up payroll in Argentina, you’ll need to follow a variety of rules to stay compliant. Employers must contribute to the pension fund system, Medicare coverage, life insurance, and labor risk insurance for all their employees as part of social security. Rates are as high as 17% for the Pension Fund and 0.50% for life insurance. Employees must also make contributions to each of these areas.
Although Argentina does not have a payroll tax, employers must pay a 35% corporate income tax. The country operates under a progressive tax system in which the income tax rate increases as an employee makes more money. It’s important to make sure you know where your employees fall on this scale when setting up Argentina payroll.
Argentina Payroll Options for Companies
Companies have multiple Argentina payroll options that come with various pros and cons. You can choose between:
- Remote payroll: With remote payroll, a foreign company puts Argentine employees on the existing payroll with other staff.
- Local outsourced payroll: In this Argentina payroll outsourcing option, a company creates a subsidiary in Argentina but chooses to have an Argentina payroll processing company administer payroll for them. The foreign company, as the Employer of Record, is still fully liable for payroll regulations.
- Internal payroll: Larger companies may choose to run their own payroll by creating a subsidiary and then setting up human resources personnel in Argentina that can manage payroll. This option is more expensive and requires a full understanding of all Argentine employment laws.
- Fully outsourced payroll: If you want to fully outsource Argentina payroll, work with a global PEO. Globalization Partners takes care of your payroll and assumes any risk on your behalf.
How to Set Up a Payroll in Argentina
Before you set up Argentina payroll, you have to establish your subsidiary in Argentina. It could take months before you’re prepared to hire employees, causing some potential workers to look for other employment opportunities. If you’re ready to set up Argentina payroll, you’ll need some personal information from employees including their national ID number, deductions, and position.
You must also register all employees with the Argentina tax authority and make sure you retain the right taxes from your employees’ salaries. You can do this at the National Tax Office. Employees also need to register with the Social Security Registry before their start date.
Terminating an employee can prove difficult in Argentina. It is best to have a strong, written employment contract that outlines entitlement and termination. Employees are entitled to severance pay based on their highest regular monthly salary accrued over the last year. Fixed-term employees are entitled to their remaining salary through the completion of the contract if you terminate the contract prematurely. Employees with union representatives may qualify for more severance pay.
Payroll Processing Company in Argentina
Don’t let the intricacies of your Argentina payroll options keep you from expanding your company. Globalization Partners can take care of your global payroll and assume all the risk as your Employer of Record. Contact us today to learn more.