Argentina is a favorable country for foreign investment due to its preferential tax regime, highly skilled and competitive, attractive environment for investment, industrial diversity, easy access to natural resources, and high quality of life. It is a developing country that ranks 47th on the Human Development Index. The country boasts the second-largest economy in South America, attracting foreign investors.
Companies planning to run a business in Argentina should be familiar with the local rules and regulations imposed by the Argentina government. This helps in governing payroll in Argentina and attracting a proficient workforce. Furthermore, they should understand income tax, corporate tax laws, and social security for smooth company operations.
Understanding how to handle the onboarding process efficiently, including the Argentina payroll process, helps you attract, hire, and retain proficient employees in Argentina. You require an in-depth understanding of payroll tax in Argentina and labor requirements to form perfect and compliant payroll. The guide below describes all aspects you should know about payroll in Argentina.
How Is Payroll Calculated in Argentina?
Payroll is the compensation an employer offers employees for their services over an agreed duration. Argentina’s payroll policies and procedures incorporate factors like payment distribution and tracking the employees’ working hours.
You should regularly uphold records to have an error-free payroll calculation. Furthermore, you should calculate social security contributions and other applicable deductions as per the payroll rules and regulations in Argentina.
Important Elements of Salary Structure in Argentina
The following section outlines the elements that constitute the salary structure in Argentina:
Cost to Company (CTC)
The CTC represents an annual amount payable by a company when it hires an employee. It involves various factors like the employee’s net remuneration, gross remuneration, supplementary benefits, and payroll deductions in Argentina.
It denotes the salary amount after calculating all benefits. It entails different components like health insurance, social security contributions, etc.
The net salary refers to the amount left after the employer has calculated all deductions from the gross salary. The corresponding amount is transferred to the employee’s bank accounts.
It signifies the amount employees receive after calculating all additions and deductions from the annual salary package. It focuses on factors like the employee’s job title and the employer’s business undertakings.
It entails the employment expenses payable by employers to their employees. Notwithstanding the industry and the company, all employees are entitled to allowances.
How to Set Up a Payroll in Argentina
Companies can set up payroll in Argentina by following the steps below:
- Step 1: Register a business in Argentina with the Public Register of Commerce of Argentina. This step also validates your business name’s validity.
- Step 2: The company should be registered with IGJ (Justice Minister), AFIP (Tax and Social Security Authority), and Rentas (Municipal or District Authority).
- Step 3: Register new employees with “Mi Simplificacion,” an online form on the AFIP website. Make sure to register on the same day that they start employment with a new company or at least within 24 hours before starting.
- Step 4: Collect all the essential employee information and upload it on the payroll software. Moreover, it should include a Social Security Number, Health Insurance Number, national I.D number, Tax Identification Number (CUIL) (for foreign employees), and an offer letter/labor contract signed by the company to calculate the employees’ pay amounts accurately.
- Step 5: Establish a legal entity to process a payroll in Argentina.
- Step 6: Obtain a tax identification number CUIT (Código Único de Identificación Tributaria) from AFIP.
- Step 7: Register for Social Security System in Argentina
- Step 8: Open an Argentina bank account with a local bank to disburse payroll-related payments to employees and the authorities. Deposit a minimum of 25% of the initial capital with the National Bank of Argentina.
- Step 9: Issue employee insurance.
- Step 10: Sign wage books with the Ministry of Labor.
- Step 11: Finalize the employee payroll amount and your company’s payroll cycle and system.
- Step 12: Compensate all employees through a local entity (which lets you hire and pay employees legally) or use services from Argentina’s Employer of Record (EOR) platform.
A Step-by-step Process of Payroll Processing in Argentina
The various stages involved in the processing of payroll in Argentina are discussed below.
1. Pre-payroll stage
The mandatory components involved in processing payroll and payments are described in the following section:
You should register your business as a legal entity with Public Register of Commerce of Argentina to get a unique business number. Make sure to use this number on all formal payroll communications.
These components refer to the existing and new statutory compensation laws and regulations that approve employee salary and leave entitlements.
It helps you calculate regular and special attendance, overtime compensation, permissions, and more.
It considers different factors impacting salary calculation, i.e., allowances, deductions, leave types, and payroll tax in Argentina.
The component specifies a pre-decided payment schedule to release salaries and avoid delays. It keeps employees informed about when they will get their monthly payments.
You must collect personal and professional details of all your employers to disburse salaries to them accurately. Enter these details in the payroll system to initiate the payroll process.
2. Payroll calculation stage
In this stage, the data collected from the previous stage is passed into the payroll system. Make sure to track working hours, and calculate taxes and deductions. Next, calculate employees’ net salaries and print paychecks to guarantee an error-free payroll process.
You can use either automatic or paper-based methods to calculate and maintain payroll records. Subsequently, you can timely process all employees’ payments and simplify the compliance and reporting processes.
3. Post-payroll stage
The payroll manager should strictly abide by statutory compliances during payroll processing. Personal deductions (like medical care contributions, mortgage deductions, life insurance premiums, etc.), business deductions, social security contributions, and more should be deducted during payroll processing. The related government bodies should compensate for all such deductions.
It considers tracking payments and all payroll-related expenditures that assist you in meeting payroll reporting and compliance requirements.
Payroll reporting and compliance
You should keep all obligatory compliance and reporting forms ready to send to local regulatory authorities. This component also specifies all compensation, contributions, withholdings, and other data to be filled in your reporting and compliance forms.
As per the salary, employees and employers should make social security contributions in Argentina to conform to the Argentina payroll requirements.
- 18.00% – 21.00%: Pension Fund (the minimum salary is 9,787.95 ARS, and the maximum salary is 318,103.83 ARS)
- 2.41%: Labour Risk Insurance
- 6.00%: Health Insurance
- 0.50%: Life Insurance
- 100 ARS: Occupational disease trust fund (FFEP)
Employee payroll contributions incorporate the following elements.
Employee payroll contributions
11% (Up to 28,000.65 ARS)
Mandatory Provident Fund (MPF) for taxable income ranging from HKD 7,100 up to HKD 30,000
3.00% (up to 28,000.65 ARS)
3.00% (up to 28,000.65 ARS)
Employee income tax
Annual tax base
Up to 64,532.64
64,532.64 – 129,065.29
129,065.29 – 193,597.93
193,597.93 – 258,130.58
258,130.58 – 387,195.86
387,195.86 – 516,261.14
516,261.14 – 774,391.71
774,391.71 – 1,032,522.30
1,032,522.30 and up
The type of contract and Sections 126 and 128 of the Argentina Employment Contract Law determine the payroll cycle in Argentina.
Generally, the employers follow the below payment cycles in Argentina:
Monthly employees are paid at the end of each calendar month.
Employees with hourly or daily wages are paid weekly or bi-weekly.
Employees with per-project agreements are paid weekly or bi-weekly.
The payments for monthly or bi-weekly format are released within four working days.
The payments for the weekly format are released within three working days.
Argentina Payroll Options for Companies
Employers can choose one of the most suitable options to process payroll in Argentina based on their requirements and financial plan. The below section discusses different HR payroll Argentina options.
Larger companies committed to Argentina can operate local payroll. They must complete incorporation, register the business and hire skilled staff. A proficient HR must oversee payroll in Argentina and fulfill all withholding, tax, and payroll requirements.
To use this HR payroll Argentina option, the company will require a local accounting firm and legal counsel to guarantee full compliance with the Argentine employment laws.
This option in the Argentina payroll guide implies that a combination of remote payroll and your payroll can streamline payroll processing in the country. The remote payroll will compensate the employees.
Argentina payroll processing company
You should intensely research the market if you aim to use this option of the Argentina payroll guide. It focuses on using an experienced and trustworthy payroll processing company familiar with creating payroll and payroll rules and regulations in Argentina. Moreover, that company can handle payroll calculations and payments.
Argentina payroll outsourcing
The option offers an easy, reasonable, and flexible approach to managing payroll in Argentina. Partnering with an international PEO service provider like Multiplier can help manage all the Argentina payroll process components, social security payments, tax withholdings, and other statutory requirements.
Entitlement and Termination Terms
Employers are advised to include all the entitlement and termination terms in the contract for transparency.
Entitlement terms in Argentina
The following section discusses the benefits to which Argentina employees are entitled.
Paid time off
- The employees in Argentina are entitled to up to 35 days of paid annual leave (based on their employment duration).
- The new employees receive 1 day of paid leave for every 20 days worked.
- The below table shows the number of paid leaves entitled to employees based on their employment duration.
No. of paid leave
6 months – 14 days
5 – 10 years
10 – 20 years
More than 20 years
- Employees under 5 years of experience under the same company are entitled to up to 3 months of paid sick leave.
- Employees with more than 5 years of experience under the same company are entitled to up to 6 months of paid sick leave.
- The employer compensates the sick leaves’ pay.
- The Employment Risk Insurance will compensate for any sick pay, medical treatment, or rehabilitation for an occupational accident/injury/illness.
- The female employees receive 90 days of maternity leave.
- It should be taken at least 30 days before the expected delivery date.
- Commonly, the maternity leave is equally shared i.e. 45 days before and 45 days after the child’s birth.
- The Argentine Social Security system pays for maternity leave.
- The fathers receive paid paternity leave of 2 days.
- The employees in Argentina get 16 public holidays per year.
New Year’s day
Day of remembrance for Truth and Justice
Revolution Day Holiday
Flag Day Holiday
Death of San Martin
Day of Respect for Cultural Diversity Holiday
Day of Respect for Cultural Diversity
National Sovereignty Day
- The employees get up to 10 paid leaves for their marriage.
- The employees get three days of paid leave on the occasion of the death of a spouse, parent, or child and one day’s leave on the death of a sibling.
- The employees get two days of paid leave for attending high school or university examinations.
Termination terms in Argentina
- The employer should validate any termination with notice unless it is via mutual agreement, severe misconduct, the employees’ incapability to fulfill their work requirements or economic aspects.
- The notice period for an employee (working under the same employer) depends on the duration of employment as stated below:
Duration of employment
3 months – 5 years
- The employees dismissed without a just cause get severance pay equal to one month’s salary on each year of employment.
- According to the statutory law of Argentina, the employees dismissed for redundancy get severance pay equal to half a month’s pay for each year of employment.
- The employees dismissed on fair grounds don’t receive any severance payment.
Argentina Payroll Processing Company
Foreign investors willing to administer timely, error-free, and compliant payroll in Argentina should thoroughly understand local tax, reporting, and employment and compensation requirements. They should be aware of compliance with Argentina Labor and local employment laws before creating payroll in Argentina. You can utilize services from an international PEO company like Multiplier to procure the finest advantages of payroll rules and regulations in Argentina.
How Can Multiplier Help with Global Payroll?
Setting up payroll management in a foreign country governs diverse factors, from payroll setup to entitlement and termination terms. It can be challenging for businesses to manage the payroll process because it is laborious independently. You can utilize the services from an international PEO platform like Multiplier to complete the Argentina payroll process effortlessly.
Multiplier is a celebrated EOR solutions platform competent to handle payroll processing and other related tasks. Also, we provide a one-click payroll solution for worldwide teams with payments distributed in local currency.