The outlook for global tax policy and controversy in 2021: Jurisdiction reports Contents Argentina Kazakhstan Australia South Korea Austria Kuwait Bahrain Luxembourg Belgium Malaysia Brazil Mexico Canada Netherlands Chile New Zealand China Mainland Nicaragua Colombia Norway Costa Rica Oman Croatia Panama Cyprus Peru Czech Republic Philippines Denmark Poland Dominican Republic Portugal El Salvador Qatar Egypt Russia Estonia Saudi Arabia Finland Singapore France Slovakia Germany Slovenia Greece South Africa Guatemala Spain Honduras Switzerland Hong Kong Taiwan Hungary Thailand India Turkey Indonesia UAE Iraq Ukraine Ireland United Kingdom Israel United States Italy Vietnam Japan Glossary Jordan 2 | 2021 Tax Policy and Controversy Outlook 2021 Tax Policy and Controversy Outlook | 3 Section 2: Tax policy in 2021 2.1 Key drivers of tax policy change The government seeks fiscal sustainability but at a pace • Online☒ betting tax rate increase that allows the country to recover and sustain that recovery. • VAT☒ and import duty exemption on vaccines and disposables To achieve that, those who foster economic growth, recovery imported by the Ministry of Health Argentina • Return to Contents and exports will receive advantages. Some proposed measures for 2021 include: • Discussions☒ about a new wealth tax on high net worth individuals • Excise☒ taxes increase on electronic products EY key contacts Section 1: Tax rates (2020–2021) 2.2 Tax changes in 2021 Tax policy Tax types Likelihood of changes in 2021 Direction of change Ariel Becher 1.1 Key tax rates [email protected] 1. Overall corporate income tax Change already proposed or known for 2021☒ Lower in 2021 ☒ 2020 2021 % change responsibility +54 11 4318 1686 Change possible or somewhat likely in 2021 ☒ Same in 2021 ☒ Corporate income 30% 25% (*) -17% No changes expected in 2021 Higher in 2021 tax — top rate Tax controversy (Please list top 2. Overall size of corporate tax Change already proposed or known for 2021☒ Smaller in 2021☒ base in 2021 Felipe Stepanenko national rate, and Change possible or somewhat likely in 2021 ☒ Same in 2021 [email protected] if local rates apply, No changes expected in 2021 Larger in 2021 +54 11 4510 2268 an average of the top local rates) 3. Interest deductibility Change already proposed or known for 2021 ☒ Lower tax in 2021☒ Individual income 35% 35% — Change possible or somewhat likely in 2021 ☒ Same tax in 2021☒ tax — top rate No changes expected in 2021 Higher tax in 2021 (Please list top national rate, and 4. Hybrid mismatches Change already proposed or known for 2021☒ Lower tax in 2021☒ if local rates apply, an average of the Change possible or somewhat likely in 2021 ☒ Same tax in 2021 top local rates) No changes expected in 2021 Higher tax in 2021 The 2021 Tax Policy and VAT, GST or sales 21% 21% — 5. Treatment of losses Change already proposed or known for 2021 Lower tax in 2021☒ Controversy Outlook is a survey tax — standard rate of EY tax policy and controversy Change possible or somewhat likely in 2021 ☒ Same tax in 2021☒ (Please list leaders and represents only the standard national No changes expected in 2021 Higher tax in 2021 views of those respondents. rate, and if local rates apply, an 6. Capital gains tax (impacting Change already proposed or known for 2021☒ Lower in 2021 ☒ • This information is current as of average of the corporations) December 2020. Change possible or somewhat likely in 2021 Same in 2021 ☒ standard local rates) No changes expected in 2021☒ Higher in 2021 N/A, as there is no CGT 7. Withholding taxes Change already proposed or known for 2021☒ Lower in 2021 ☒ Change possible or somewhat likely in 2021 ☒ Same in 2021 ☒ No changes expected in 2021 Higher in 2021 ☒ (*) Ongoing discussions about the possibility of maintaining the 30% rate for 2021. To be monitored. 4 | 2021 Tax Policy and Controversy Outlook 2021 Tax Policy and Controversy Outlook | 5 Argentina Tax types Likelihood of changes in 2021 Direction of change Tax types Likelihood of changes in 2021 Direction of change 8. Controlled foreign Change already proposed or known for 2021 Lower tax in 2021☒ 17. Changes to tax enforcement Change already proposed or known for 2021 Decreased enforcement in 2021 ☒ companies approach Change possible or somewhat likely in 2021 ☒ Same tax in 2021☒ Change possible or somewhat likely in 2021 ☒ Same enforcement in 2021 ☒ No changes expected in 2021 Higher tax in 2021☒ No changes expected in 2021 Increased enforcement in 2021 N/A, as there is no CFC regime ☒ 18. Do you expect significant tax Yes — comprehensive tax reform ☒ reform in your jurisdiction in 9. Thin capitalization Change already proposed or known for 2021 Lower tax in 2021 ☒ Yes — significant tax reform☒ 2021? Change possible or somewhat likely in 2021 ☒ Same tax in 2021 ☒ No — present tax changes are routine No changes expected in 2021 Higher tax in 2021 N/A, as there is no thin capitalization regime ☒ ☒ 2.3 Tax policy outlook for 2021 — summary 10. Transfer pricing changes Change already proposed or known for 2021 Lower tax in 2021☒ Overall corporate income tax responsibility Overall individual income tax responsibility Change possible or somewhat likely in 2021☒ Same tax in 2021☒ No changes expected in 2021☒ Higher tax in 2021☒ No No Lower Higher Lower Higher 11. Research and development Change already proposed or known for 2021 Enhanced incentives in 2021 ☒ change change incentives Change possible or somewhat likely in 2021☒ Same incentives in 2021 ☒ Overall VAT/GST/sales tax responsibility No changes expected in 2021 Reduced incentives in 2021 12. Other business incentives — Change already proposed or known for 2021 Enhanced incentives in 2021☒ No including depreciation/ Lower Higher Change possible or somewhat likely in 2021 ☒ Same incentives in 2021☒ change amortization/capital asset allowances, etc. No changes expected in 2021 Reduced incentives in 2021 13. VAT, GST or sales tax rate Change already proposed or known for 2021☒ Lower in 2021☒ 2.4 Tax policy outlook for 2021 — detail 2.5 In 2021, what do you believe your Change possible or somewhat likely in 2021 Same in 2021☒ jurisdiction’s primary response will be to Corporate income taxes No changes expected in 2021 Higher in 2021 the financial cost of responding to the • In☒☒ 2018, the rate of 35% decreased to 30% with the goal of COVID-19 crisis? N/A, as there is no VAT, GST or sales tax dropping to 25%. • Higher☒ or new taxes 14. VAT, GST or sales tax base Change already proposed or known for 2021 Smaller in 2021☒ • This☒ drop was expected to happen in 2021, but may be delayed, • Corporate as such, the 30% rate may continue. Change possible or somewhat likely in 2021☒ Same in 2021 Taxes on digital business activity • Individual ☒ No changes expected in 2021 Larger in 2021 • VAT/GST or sales ☒ • VAT☒☒ (IVA) on digital services is already in force. N/A, as there is no VAT, GST or sales tax • More☒☒ enforcement of existing revenue sources ☒ • A☒ tax similar to a DST (IIBB) is expected to enter into force in 15. Top marginal personal Change already proposed or known for 2021 Lower in 2021☒ 2021 at a provincial level. • Shift☒ in governmental priorities to refocus resources on income tax rate COVID-19 ☒☒ Change possible or somewhat likely in 2021☒ Same in 2021☒ Taxes related to climate change or sustainability • Little☒ or no revenue raising discussion at this point No changes expected in 2021 Higher in 2021 • Liquid☒☒ fuel tax and carbon dioxide tax will not apply to imports of diesel and diesel oil or on domestic sales during 2021 to • Other☒ 16. Individual income tax base Change already proposed or known for 2021 Smaller in 2021 compensate for peak demand that cannot be met by local Change possible or somewhat likely in 2021 Same in 2021 production. No changes expected in 2021 Larger in 2021 VAT/GST/sales taxes • VAT☒☒☒ and import duty exemption on vaccines and disposables imported by the Ministry of Health 6 | 2021 Tax Policy and Controversy Outlook 2021 Tax Policy and Controversy Outlook | 7 Argentina 2.6 Has your jurisdiction formally discussed, proposed or enacted any of the following revenue Section 3: Tax enforcement in 2021 raising measures in the wake of the COVID-19 crisis? Known to be under formal Measure Proposed Enacted discussion 3.1 Current general approach to tax 3.3 Likely enforcement developments in 2021 enforcement • Increase☒ of tax audits on cross-border transactions and Taxes on sectors that • Increase☒ of tax audits on cross-border transactions structures, based on TP regulations and information regimes performed well during issued in 2020 COVID-19 pandemic 3.2 Key enforcement developments seen in Digital services tax 2020 Corporate taxes • Transfer☒ pricing audits VAT/sales taxes Individual taxes 3.4 Top tax audit issues in 2021 Inheritance taxes Issue name Description Wealth taxes 1 Disallowance of deductions Intercompany cross-border charges Financial transactions tax 2 CFC issues Foreign companies owned by Argentinian individuals Solidarity surcharges or similar levies 3 DEMPE Discussions about functions and activities carried out in Argentina and not properly remunerated Carbon/other sustainability taxes 4 Transfer pricing Business restructuring, financial transactions, foreign intermediaries, among others Other (please specify) 5 MDR Expected audit activity based on tax planning to be reported under the new MDR obligation 3.5 In terms of tax