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Argentina - Indirect Tax Guide

Argentina - Indirect Tax Guide

Explore the requirements and rules that apply to Indirect Taxes in Argentina.

Explore the requirements and rules that apply to Indirect Taxes in Argentina.

Argentina - Indirect Tax Guide

General

Types of indirect taxes (VAT/GST and other indirect taxes).

VAT

Are there other indirect taxes?

  • Turnover tax. 
  • Excise taxes. 
  • Tax on bank accounts. 
  • Municipal taxes. 
  • Stamp tax.

What supplies are subject to VAT?

Argentinean value-added tax (VAT), is tax-based on the value-added method. It is applied following the subtraction method on a financial basis of tax against tax.

VAT is due on:

  • the sale by VAT taxpayers of movable property located in Argentina
  • work, leasing and services specified in the law, provided they are performed in Argentina
  • the final importation of movable property
  • the use or exploitation in Argentina of services which are supplied by non-residents (i.e. import of services), including digital services.

For VAT purposes, the concept of taxable “sale” includes:

  • sales and other transfers for consideration of movable property located in Argentina (payment in kind, allocation of property on the liquidation of a company, contribution to a company)
  • the incorporation of movable goods produced by the taxpayer, in the case of leasing and rendering of services exempt or excluded from taxation
  • transfers of movable goods which are attached to the ground at the time of the transfer, provided they have their own individuality and represent goods in trade for the taxpayer
  • the removal of movable property by the owner for his personal use or consumption
  • transactions carried out by commission agents, consignees and other who sell or buy personal property in their own name but on behalf of third parties.

Under the VAT system, tax is levied at each stage of the manufacturing and distribution process on a non‑cumulative basis. The accumulation of tax is avoided through the deduction of VAT invoiced to the entity. The entity pays VAT on the total amount invoiced in each monthly tax period but is entitled to recover the input VAT invoiced to the entity during the same period. If, in any tax period, the credit for input VAT is higher than the amount of VAT due on output, the entity is not entitled to a refund (unless the refund is related to exports); rather, the excess is credited against future VAT liabilities.

What are the standard or other rates (i.e. reduced rate) for VAT/GST and other indirect taxes?

  • VAT: 21 percent (standard rate); 10.5 percent (capital goods, meat and grains, among others); 27 percent (public services such gas and electricity); 2.5 percent and 5 percent (newspapers and magazines). Exports are zero-rated. The exempt items include books, planes and services such education, religion and medical assistance. 
  • Turnover tax: 0 percent to 5 percent with a 3 percent average rate.
  • Tax on bank accounts: 0.6 percent on every credit and debit in bank accounts.
  • Municipal taxes: 0 to 3 percent. This tax is based on sales that are attributable to the jurisdiction and/or municipality. It applies to any activity as long as there is an establishment in the jurisdiction or municipality.
  • Stamp tax: 1 percent of the total value of the contract or instrument. 

VAT/GST registration

Who is required to register for VAT/GST and other indirect taxes?

Private individuals, legal entities and/or permanent establishments performing taxable activities in Argentina.

Is voluntary registration for VAT/GST and other indirect taxes possible for an overseas company (e.g. if the annual turnover is below the relevant VAT/GST and other indirect taxes registration threshold)?

No. VAT registration is not possible without a permanent establishment in Argentina. If the company (permanent establishment) performs activities in the country, VAT registration is mandatory.

Are there any simplifications that could avoid the need for an overseas company to register for VAT?

VAT registration is not possible without a permanent establishment in Argentina. If the company (permanent establishment) performs activities in the country, VAT registration is mandatory.

Does an overseas company need to appoint a fiscal representative?

Only in a few cases, such as international transport, in order to apply for a VAT refund.

Which forms and supporting documentation does an overseas company need to submit for VAT/GST and other indirect tax registrations?

Not applicable.

Is grouping* for VAT/GST and other indirect taxes possible? 

No.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

  • VAT returns: monthly. 
  • Turnover tax returns: monthly. 
  • Excise taxes: monthly. 
  • Tax on bank accounts: no return needs to be submitted. Withholding tax is applied by the bank. 
  • Municipal taxes: monthly or bimonthly.

What are the exchange rate rules in your country?

If a business receives a purchase invoice in a foreign currency, it should use the latest closing day exchange rate published by the national bank. A business can issue VAT invoices denominated in a foreign currency. In this case, the exchange rate must be stated in the invoice.  

International Supplies of Goods and Services

Exports – Goods

How are exports of goods treated?

Exports of goods and services are included in the scope of VAT, but they are taxed at a zero rate. This means VAT is not levied on the output but VAT paid on inputs may be recovered through tax refunds, which the taxpayer may request after shipping the goods.

Goods supplied and services performed abroad are not subject to tax.

Exports – Services

How are exports of services treated for VAT/GST purposes?

Exports of services are included in the scope of VAT but taxed at a zero rate. This means VAT is not levied on the output but VAT paid on inputs may be recovered through tax refunds, which the taxpayer may request after delivering the services.
Services performed abroad are not subject to tax.
Regarding GST in most of the Argentinean jurisdiction export of services are exempt.

Imports – Goods

How are goods dealt with on importation?

When goods are imported into Argentina, import VAT and customs duty may be due. This must be paid or secured before the goods will be released from customs’ control.

Imports – Services 

How are services brought in from abroad treated for VAT purposes?

Services rendered and loans granted from abroad which are used/utilized in Argentina (import of services) by Argentinean VAT payers are taxable in the country. The subject obliged to pay the VAT is the borrower, with the possibility to compute the VAT paid as a credit in the month following the payment.

Digital services as streaming or downloading, webservices, online advertising, SaaS and Data storage provided by foreign companies are reached by VAT at 21 percent rate. The service recipient is the responsible party for reporting and paying the VAT. However, if resident intermediaries (e.g. credit card companies, banks) collect the payment for the services, they must act as collection agents for the VAT.

The services reached are those provided by the companies listed on Exhibit II of the GR. 4240.
When a resident intermediary is not involved, the consumer of the service is responsible for declaring and paying the VAT.

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

  • VAT: no, with some exceptions (i.e. international transport). 
  • Turnover tax: no. 
  • Excise taxes: no. 
  • Tax on bank accounts: no. 
  • Municipal taxes: no.

Are there any exemptions with the right to recover or deduct input VAT?

Yes, export of goods or services.

Are there any restrictions to the deduction of input VAT?

Yes, there are certain items without the right to recover VAT. Input VAT related to acquisition of certain services, such as hotels, restaurants and similar expenses, is not deductible. Amounts paid on the purchase, import or rent (including leasing contracts) of automobiles can be claimed as a tax credit only if the cost of acquisition, import or market price is equal or less than 20,000 Argentina pesos (ARS) (VAT net). VAT on services rendered by bars, restaurants, hotels, garages and clothes (except uniforms) is also not recoverable.  

Tax Points

When is VAT/GST due on a supply of goods or services?

As a general rule, the VAT on supply of goods is triggered on the delivery of the good or the issuance of the invoice, whichever occurs first. Some goods may have a different treatment. As a general rule for services, the tax point is triggered when the service provided is finalized or with the collection of all or part of the price.

There are some exemptions, such as property rent or loans. In these cases, the tax point is triggered with the deadline for the collection or with the collection of all or part of the price.

Invoices

Is a business required to issue tax invoices?

Yes.

Is it possible/mandatory to issue invoices electronically?

Yes. It is mandatory for VAT registered taxpayers, with a few exceptions.

Is it possible for the vendor to issue an invoice (i.e. self-billing)?

No, it is not possible.  

Record-Keeping Requirements

How long must records and invoices be retained?

The period for which books, accounting registry and invoices shall be stored is not prescribed. However, the time limit of five years prescribed by the statute of limitations is applied.

Can the invoices be stored abroad?

No.

Audits

Do tax audits take place on a regular basis?

No, audits take place on a random basis or when a VAT recovery request is filed.

Are audits done electronically in your country (e-audit)? If so, what system is in use?

Yes, Argentinean tax authorities can conduct an e-audit or a physical audit. The e-audit is done online through the website of the tax authorities, where the taxpayer must answer questions and attach supporting documentation.

What penalties can arise from non-compliance?

There are certain penalties for failing to fulfill formal obligations. The penalty for failing to pay VAT varies between 50 percent and 100 percent of the unpaid VAT. In cases of fraudulent practices, there are fines ranging from two to 10 times the unpaid taxes and, in some cases, imprisonment. Compensatory interest is presently at a rate of 3 percent.

Special Indirect tax rules

Are there any special rules for the sale of a company by one taxpayer to another where VAT is not due on the sale?

Under local law, transfer on going concern (TOGC) is not subject to VAT if it is done within the framework of a tax-free reorganization as provided by Article 77 of the Income Tax Law (i.e. if a transfer takes place within the same economic group). In this respect, an economic group is considered to exist if at least 80 percent of the capital of the transferred company belongs to the owner, partner or shareholders of the transferor company.

Are there unique specific indirect tax rules that you would not expect to find in ‘standard’ VAT jurisdictions?

Sales of goods from the mainland to the special customs area are considered exports. Hence, refunds are possible. Any activity carried out in the former Territorio Nacional de Tierra del Fuego is exempt from national taxes.

Does a reverse charge mechanism apply for goods or services?

Yes, on imports of services, when the borrower is a VAT registered taxpayer.

Are there indirect tax incentives available (e.g. reduced rates, tax holidays)?

Exemption for certain localizations (VAT and municipal tax).  

Rulings

Are rulings and decisions issued by the tax authorities publicly available?

Yes.

For further information please contact:

Vivian E Monti
Partner
KPMG in Argentina
T: +54 11 4316 5961
E: vmonti@kpmg.com.ar


Gabriel Vecchio
Director
KPMG in Argentina
T: +54 11 4316 5740
E: gvecchio@kpmg.com.ar

Victor Brigo
Senior Manager
KPMG in Argentina
T: +54 11 4316 5740
E: vbrigo@kpmg.com.ar

Footnote

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

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