Payroll in Argentina: Local Employment and Tax Laws
Argentina is a country with the third-largest economy in Latin America. It's also home to a talented and educated labor force, which makes it a highly desirable workforce sourcing place for US companies seeking remote team members. Another bonus point in this story is that Argentina has lower salary rates than US countries for the same positions.
However, due to the strong worker protection and labor unions, doing business in Argentina may prove complex. You may find yourself confused with all the laws and regulations surrounding payroll in Argentina and even easily make a mistake that can cost you valuable time and money. We wrote this guide to help you prevent these common pitfalls and fully reap the benefits of hiring in this Latin American country.
How Do Argentina's Payroll Laws and Taxes Work?
Like all other countries, Argentina has strict laws that cover employee benefits, payroll, and taxes. Understanding them may take time and effort, but let's start with the basics.
US businesses may be required to pay local workers in the local currency or the Argentine Peso (ARS). The Ministry of Labor oversees the enforcement of all statutes and regulations related to payroll in Argentina. The labor laws guarantee the minimum standards of compensation and treatment for all private sector workers except for domestic and agricultural workers.
Here are the regulations you may want to know right away:
Employee Entitlements in Argentina
Employees in Argentina are entitled to the following protections:
Working Hours and Overtime
The maximum number of work hours is 48 per week, spread over a 6-day workweek at 8 hours per day. Workdays can be flexible, however, and an employee can work more or fewer hours on a particular day.
Employees can't work overtime of more than 30 hours per month or 200 hours per year without special permission. Companies have to pay an overtime rate of 150% on weekdays and 200% on weekends and public holidays.
Annual Leave
Argentina has 12 public holidays, and employers must pay employees for these days even if they aren't working. Compensation goes double the regular hourly wage if employees work during public holidays.
Paid vacation days can range depending on how long an employee works for you, as follows:
- 14 days of leave if they've been with you for less than five years
- 21 days of leave if they've been with you for more than five but less than ten years
- 28 days of leave if they've been with you for more than ten but less than 20 years
- 35 days of leave if they've been with you for more than 20 years
Sick Leave
Employees are entitled to a maximum of three months of sick leave if they've worked for you less than five years. Over this period, workers get up to six months of paid sick leave.
Employers must pay sick leave unless it's a work-related illness or injury. In that case, Employment Risk Insurance covers the expenses, which is something employers pay over the years.
Maternity and Paternity Leave
Maternity leave for women is 90 days and must start at least 30 days before birth, although 45 is more common. On the other hand, fathers get two days of paid paternity leave. The Social Security system covers both.
Other Types of Leave
Employees are also entitled to leave in the following situations:
- Marriage
- Death of immediate family members
- High school or university exams
Anti-discrimination
Local laws usually protect workers from discrimination related to:
- Race
- Religion
- Nationality
- Ideology
- Political affiliation
- Sex
- Financial issues
- Social status
- Physical condition
Minimum Wage and Payroll
The national minimum wage in Argentina is 32,616 ARS. Employers can pay it weekly, bi-weekly, or monthly but must issue paychecks within four days for monthly or bi-weekly employees and within three days for weekly employees.
Additionally, employees are entitled to a 13th salary, which must be paid in two installments, one before June 30th and the other before December 18th. Each installment must be 50% of the highest monthly wage that the employee received during the previous six months.
Local Employment and Tax Regulations With Contributions
In Argentina, employers must cover the expenses of the following payroll contributions:
- Pension fund: 18 to 21% of wages
- Health insurance: 6% of wages
- Labor Risk Insurance: 2.41% of wages
- Life insurance: 0.5% of wages
- Occupational disease trust fund (FFEP): 100 ARS
Employees on their part must pay:
- Pension fund: 11.00%, maximum 28,000.65 ARS
- Social Security: 3.00%, maximum 28,000.65 ARS
- Health insurance: 3.00%, maximum 28,000.65 ARS
When it comes to the employee income tax, it's calculated as a percentage of income according to the following criteria:
- 64,532.64 ARS or less: 5%
- 64,532.64 - 129,065.29 ARS: 9%
- 129,065.29 - 193,597.93 ARS: 12%
- 193,597.93 - 258,130.58 ARS: 15%
- 258,130.58 - 387,195.86 ARS: 19%
- 387,195.86 - 516,261.14 ARS: 23%
- 516,261.14 - 774,391.71 ARS: 27%
- 774,391.71 - 1,032,522.30 ARS: 31%
- Over 1,032,522.30 ARS: 35%
Argentina has no payroll tax, but the corporate income tax rate is 35%.
How Does Argentina Payroll Processing Work?
You have several options for complying with payroll and tax laws in Argentina. You can handle all aspects of employment and payroll independently, outsource all the operations, or do so partially. Here's how that translates in practice:
Internal Payroll
If you're committed to establishing your entity in Argentina and handling employment and payroll internally, you can do so in legal terms. You will, however, need to register a company and hire HR staff. To do this, you'll have to have an in-person HR professional who is an expert in all aspects of Argentine tax and labor law.
Internal payroll is the most expensive and time-consuming option. You'll need to pay for multiple expenses and consult with qualified employment, labor, and tax attorneys to ensure you comply with all laws. The penalties for violations can be significant.
Local Payroll Partners
Under this model, you still need to register a local entity in Argentina, but you can outsource payroll administration to a local company. A reliable partner will handle calculations, payments, and filing, and you'll be responsible for compliance with all employment, payroll, immigration, and tax regulations.
Remote Payroll
Under a remote payroll model, a company not based in Argentina gets a license to do business and employ workers in Argentina. The employees are put on the existing payroll with other staff.
Fully Outsourced Payroll
If you don't want the risks and exposure of employing in Argentina, you can work with an employer of record or EOR. This company will take over the risks and all the demanding payroll processing tasks in Argentina. A reputable EOR will handle reporting, filing, payments, withholding, and other statutory requirements for you. It will also employ workers on your behalf, so you don't have to worry about compliance issues.
How to Choose the Best Payroll Outsourcing Company?
Handling payroll is an inevitable part of doing business. Due to the high stakes and complex nature of managing this process, many companies choose to work with payroll outsourcing companies. Such partnership allows them to simplify payroll processing and minimize legal and financial risks.
However, choosing the best payroll outsourcing company is not an easy task. Ultimately, your employees are your responsibility, and working with an unreliable or unqualified partner will reflect negatively on you. That's why you should take your time when deciding on the company to manage your payroll outsourcing to Argentina and consider the following factors.
What Services Do Payroll Companies Offer?
Look into the different service types an Argentina payroll company offers. The best one will handle all the demanding tasks of employment and payroll taxes in Argentina, including:
Payroll Processing
Payroll processing is a primary and most significant payroll service. It will ensure your employees get paid promptly in their currency over easy-to-navigate and highly autonomous software. These systems automatically calculate payroll, including factors such as:
- Wage rates
- Shift differentials
- Holiday pay
- Overtime
- Taxes
- Withholding
- Benefits
Another essential thing to consider here is the payment options. Not all payroll processing systems allow employees to have a say in whether they want to receive direct deposits, prepaid debit cards, or paper checks. If your goal is to give your employees more flexibility, look for a company with various payment options.
Paying Taxes and Filing
The second most significant reason business owners partner with payroll companies is the handling of taxes. Your payroll partner can withhold employee taxes and pay them to the appropriate agencies, file your quarterly tax documents, and issue end-of-the-year tax documents to your employees. They should also offer you an error-free guarantee, so you aren't on the hook for the fines associated with any errors they make.
Payroll Access for Employees
Employees frequently need access to their payroll information for personal matters, such as securing a mortgage or financing a car. A payroll service can offer employees self-service access to this information, so they can document their hours, pay, and update relevant details.
Onboarding New Hires
Your payroll company can simplify your HR process by collecting and reporting information and required documentation on new hires to the appropriate government agencies. For example, in Argentina, you have to deliver the following employee information into the Special Payroll Book overseen by the Ministry of Labor:
- Full name
- Date of birth
- Martial status
- Date of hire
- National ID number
- The tax ID number for foreign employees
- Position and department
- Gross earnings
- Deductions
Paid Time Off and Benefits Management
Payroll services can automatically track and manage leave and paid time off, including vacation, sick days, and more. As part of the employee self-service portal, the payroll service can facilitate requests and approval for time off.
Ease of Use and Integration
When evaluating Argentina payroll service providers, check how easily they integrate into your existing accounting software and what features they offer for your convenience. Many companies provide easy-to-use apps that give you quick and effortless access to your payroll reports and other information.
Payroll Reports
Analyzing detailed payroll reports can provide valuable insight into your business practices and results. Your payroll provider should allow you to access all your data to evaluate your company's productivity and effectiveness.
How to Evaluate a Payroll Service Provider
When you're looking into a payroll service, consider these characteristics to assess the quality and suitability of the provider with your company:
Industry Experience and Expertise
Although there are many commonalities in payroll processing regardless of industry, there are also norms and particularities specific to certain areas. Therefore, consider how long a company has been in your industry and what clients it has had.
Familiarity With Ever Shifting Laws and Regulations
Tax and employment laws change rapidly, and your payroll service provider needs to keep track of them. This is particularly important if you have a mix of international and domestic employees. Your payroll service provider should have a solid grasp of tax and employment laws in every country where you have employees.
If you want to check the knowledge of a particular company, ask how often it updates the tax tables. Every reliable partner should follow strict standards and practices to ensure compliance with changing tax or employment regulations.
Compatibility With Your Current Workflow
If you already use a specific program or system for bookkeeping or other business tasks, ask your potential payroll provider how well will the new software integrate with it. You want a solution that is easy to launch and use from the start.
Data Security Practices
You should keep your employees' personal identifiable information (PII) secure. The legal, financial, and civil penalties for data breaches can be severe. A payroll service will have access to a tremendous amount of PII, such as social security numbers, bank accounts, birthdates, and other confidential company data. You must, therefore, ensure that your provider has a highly-effective and multi-layered data security system to avoid potential data breaches.
Scalability
If you're in the early stages of international expansion and expect to continue to grow, seek out a payroll provider who will be able to handle your payroll requirements as they increase. Make sure you discuss your company's goals and how they may affect your need for payroll services in the future.
Affordability
While this shouldn't be the main factor, given the costs associated with noncompliance, you'll want to know how much payroll service providers change and what type of commitment they require. Some offer month-to-month pricing with no time commitment, while others demand long-term obligations, such as for a year. Consider what works best for your company and your budget.
Payroll Outsourcing in Argentina Made Easy
If you're planning to expand by hiring employees in Argentina, outsourcing your payroll and taxes can simplify the process so you can focus on your business goals instead of administrative tasks. The right payroll service provider will ensure you stay compliant with all the local laws and regulations and ease burdensome legal duties. It will also keep you out of business risks.
As a talent marketplace, Revelo can help you with payroll in Argentina and much more. We aid US businesses in sourcing tech talent from Latin American countries quickly and cost-efficiently. Pre-vetted for expertise and experience, our candidates become your fully-embedded team members in a matter of days, and we handle most HR duties, payroll, benefits, and compliance. How does this sound?
Reach out to Revelo today to learn more and start expanding your business.
