Countries or Jurisdictions with Low or Null Taxation

In 2017, through Law 27.430, amendments were introduced in the Income Tax Law (ITL) (Decree 824/19). Among these amendments, article 20 was incorporated, providing the following:

“For all purposes provided for in this law, any reference to “jurisdictions with low or null taxation” shall be understood as referring to those countries, domains, jurisdictions, territories, associated states or special tax regimes that establish a maximum income tax rate of less than sixty percent (60%) of the rate referred to in article 73 (a) of this Law.”

The rate referred to in article 73 of the ITL is 25%. At the same time, Decree 862/2019, ruling the ITL, in its article 25 establishes:

“For the purpose of determining the level of taxation referred to in article 20 of the ITL, the total tax rate, in each jurisdiction, levied on business income shall be considered, regardless of the levels of government that established it.”


“Special tax regime” means any specific regulation or scheme which departs from the general income tax regime in force in that country and which results in an effective rate lower than that established in the general regime.”

In accordance with the foregoing and having established the regulatory framework on which the definition of Country or Jurisdiction of Low or Null Taxation (CJLNT) is based, it can be concluded that those taxpayers whose income tax rate is less than 15%, qualify as such (having determined said limit by application of 60% on the rate of 25%, whether it is a jurisdictional level lower than the national one, or a special taxation regime).

Consequently, it remains on the taxpayer’s side to check or inquire about the income tax rate applicable in the jurisdictions with which it operates, and therefore to determine whether Transfer Pricing (TP) obligations apply.

Determining the effective tax rate of certain countries or jurisdictions often turns out to be quite difficult since in the absence of public information, taxpayers may have to request support from independent customers or suppliers, with the bureaucratic burden that this entails, or the lack of response on many occasions. In turn, leaving this responsibility on the taxpayer’s side may lead to omitting to consider certain jurisdictions CJLNT. For example, in cases where language difficulties may arise, or where exists a diversity of rates within the same territory, among other complexities.

So far, although it has leaked out that AFIP will issue a General Instruction for internal use with the list of CJLNT, taxpayers and professionals in the field would expect the publication of an exhaustive list that extinguishes the existing uncertainty in this regard and at the same time allows to develop best practices for the fulfillment of TP obligations.