Labour Modernisation Bill Provisions with tax and social security implications

The National Executive Branch, through Decree 865/2025 of 9 December 2025, convened extraordinary sessions of the National Congress to analyse, among other things, the Labour Modernisation Bill, a comprehensive initiative that introduces changes in labour, social security and tax matters.

Although the main focus of the bill is related to the regulation of employment and labour relations, the text includes specific provisions that directly affect the tax and social security contribution system.

The main articles and titles of the bill with fiscal relevance are detailed below.

1. TITLE II - The Labour Assistance Fund 

Article 67 - Tax treatment of Labour Assistance Funds

With the creation of the Labour Assistance Fund (FAL), the bill provides for the exemption from income tax of any returns, interest and other income that employers may obtain as a result of investments made within the framework of its operation, without this affecting the deductibility of the contributions made.

The exemption is limited exclusively to income derived from investments made through the FAL and does not apply to other income obtained as a result of its use.

Likewise, the bill provides for the exemption of the Labour Assistance Fund from income tax and value added tax with respect to the integration of contributions made by employers, with commissions received and any other amount other than the contributions themselves being expressly excluded from this treatment.

Article 73 – Transfer of establishments and reorganisations

In cases of transfer of establishments or assignment of personnel, under the terms of Articles 225, 229 and related provisions of the Employment Contract Law, involving a single establishment in which all employees perform their duties, the tax-free reorganisation rules provided for in Article 80 of the Income Tax Law shall apply with respect to the transfer of the Labour Assistance Fund (FAL) accounts.

Article 76 – Reduction of employer contributions. Compliance assessment

Employers who are members of the Labour Assistance Fund (FAL), with the exception of those covered by the Labour Formalisation Incentive Scheme - created in Title XX of the same bill - shall enjoy a reduction of THREE (3) percentage points in employer contributions for as long as the effects of that scheme remain in force.

Likewise, the Customs Collection and Control Agency is entrusted with conducting semi-annual evaluations to verify employers' compliance with their FAL contribution obligations. If it is found that these contributions have not been paid in full for at least THREE (3) consecutive or alternate monthly periods within the SIX (6) months covered by the assessment, there will be a THREE (3) percentage point increase in employer contributions for the omitted periods.

3. TITLE XXI – Benefits for registered employment

A reduction in employer contributions is established from the month following the enactment of the bill in the following percentages:

• 17.40% for employers in the private sector whose main activity falls within the "Services" or "Commerce" sector according to the definitions of the SME Secretariat in Resolution 220/2019, provided that total annual sales exceed the limits for being considered a medium-sized company in tranche 2.
• 15% for other employers in the private sector not included in the 17.40% rate.

4. TITLE XXIV – Amendments to tax laws

Chapter I - Value Added Tax:

The rate applicable to the provision of electricity used in irrigation systems and/or equipment for the agro-industrial sector is reduced to 10.5% (previously 27%).

Chapter II – Income Tax:

The bill incorporates the previously announced amendments regarding the calculation and adjustment of tax losses, eliminating the requirement to adhere to a payment plan as a condition for accessing the adjustment of such losses. Specifically:

• The adjustment index provided for in Article 25 of the Income Tax Law is modified, replacing the Internal Wholesale Price Index (IPIM) with the Consumer Price Index – General Level (IPC), with respect to losses generated as of 1 January 2025.
• The clarification "without the provisions of the first paragraph of Article 93 of this law being applicable" is incorporated into Article 25 of the Income Tax Law, expressly excluding the application of Index 1 provided for in Law No. 24,073.
• The ten per cent (10%) limitation on the annual amount applicable to the rental of residential properties is eliminated.
• An exemption from the tax applicable to the sale of real estate and the transfer of rights over real estate subject to the schedular tax is established for transactions carried out on or after 1 January 2026.
• Income covered by Article 98 of the schedular tax is exempt, with the exception of income derived from digital currencies, originating from the sale, exchange, barter or disposal of securities, whether or not they are listed on stock exchanges or securities markets authorised by the National Securities Commission.
• An optional valuation regime for heifer and steer stocks is introduced for owners of wintering and/or feedlot establishments.
• The tax rate scale applicable to fiscal years beginning on or after 1 January 2026 is reduced, with the maximum rate set at thirty-one point five per cent (31.5%) and the intermediate rate at twenty-seven per cent (27%).

5. TITLE XXV – Reduction of the tax burden

The internal tax under Law 24,674 is repealed for the following items:

• Insurance
• Mobile and satellite telephone services
• Luxury goods and motor vehicles, recreational or sports boats, and aircraft.

Interest, surcharges, fines and financial penalties applied under Law 11,683 are eliminated as a source of revenue for the National Institute of Cinema and Audiovisual Arts.

6. Final considerations

The provisions analysed are part of a broad legislative project that combines labour reforms with adjustments to taxation and social security. The final content and its impact will depend on the text that is ultimately approved and the regulations that may be issued.

Article written by Andrés Chacra, partner at ECIJA Argentina.