The Social Security Agreement between the United States and Mexico was signed on June 29, 2004. The agreement must be submitted to the U.S. Congress and the Mexican Senate for consideration, so the agreement is not currently in effect (December 2014). Since the late 1970s, the United States has established a network of bilateral social security agreements that coordinate the U.S. social security program with similar programs in other countries. This article provides a brief overview of the agreements and should be of particular interest to multinationals and people who work abroad during their careers. Argentina has also entered into double taxation agreements with China, the United Arab Emirates, Qatar and Turkey, but these agreements are not yet in force, but social security contributions can become a very expensive aspect of an allowance abroad, depending on the country of origin and the host country. Due to a large number of totalisation agreements that set specific conditions, confusion over social security contributions and benefit rights has gradually subsided – with the costs of employers – but the subject still often requires the advice of experts with expertise in this area. Workers who have shared their careers between the United States and a foreign country may not be entitled to pensions, survivor benefits or disability insurance (pensions) from one or both countries because they have not worked long or recently enough to meet minimum conditions. Under an agreement, these workers may benefit from partially U.S. or foreign benefits on the basis of combined or “totalized” coverage credits from both countries. Double tax debt may also affect U.S. citizens and residents working for foreign subsidiaries of U.S.
companies. This is likely to be the case when a U.S. company has followed the common practice of entering into an agreement with the Treasury, pursuant to Section 3121 (l) of the Internal Income Code, to provide social security to U.S. citizens and residents employed by the subsidiary. In addition, U.S. citizens and residents who are independent outside the United States are often subject to double social security taxation, as they are covered by the U.S. program, even if they do not have a U.S. business. For 2020, taxable net income will be taxed at rates ranging from 5 to 35 per cent for both residents and non-residents permanently in Argentina. The maximum tax rate is currently 35 per cent on net income over 762,706.57 Argentine pesos (ARS). Foreign beneficiaries can benefit from a flat-rate exemption if income tax is withheld at source (see section on worker compliance obligations and employer reporting and retention obligations).