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  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 7/1/2013

Argentina: VAT essentials 

Essential information regarding VAT as it applies in Argentina.


Scope and Rates

What supplies are liable to VAT?


The 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 and
  • the use or exploitation in Argentina of services which are supplied by non-residents (i.e. import of 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 soil 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 it is entitled to recover the input VAT that was 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 is the standard rate of VAT?


The standard rate of VAT is 21 percent.


Are there any reduced rates, zero rates, or exemptions?


There is a reduced rate of 10.5 percent for certain goods and services, including:


  • sales or imports of cattle and sheep and other derivatives which are fresh or frozen as well as of fruits and vegetables fresh or frozen under certain conditions
  • imports of certain capital goods included in the tariffs list of the Common Nomenclature of MERCOSUR
  • certain supplies of services related to the soil and farming activities
  • certain constructions relating to dwelling houses
  • interest when the loans are provided by certain financial institutions
  • transport services supplied by taxi and other means of transport if the distance travelled is over 100 km
  • specified supplies of newspapers and periodicals
  • medical services in specific cases.

There is an increased rate of 27 percent for certain services:


  • telecommunication services, except radio broadcasting and services rendered by Encotel or news agencies
  • the supply of gas or electrical power, except public illumination
  • the supply of current water and sewage services including draining and cleaning of undrained wells, with certain exemption.

Exempt services:


  • services rendered by the State, provinces, municipalities and institutions belonging thereto
  • medical services in specified cases
  • transportation of persons and freight, including international transportation
  • transport supplied by taxis if the distance travelled is less than 100 km
  • financial placements and services in those cases listed in the law (cash deposits with financial institutions, loans made between financial institutions, negotiable bonds publicly offered under Law 23,576)
  • services proper of directors, controllers and members of boards of stock corporations
  • the letting of immovable property relating to dwelling houses and to farming, the letting of immovable property with monthly rents less than ARG1,500 and, subject to conditions, relating to certain other services, except for conferences, meetings, and similar events.

Exempt goods: imports and sales of


  • books
  • newspapers and periodicals (retail distribution)
  • shares, bonds and securities
  • planes constructed and destined for the transportation of passengers and/or freight, and ships for the exclusive use in commercial activities or for defense and security
  • exports of goods and services are zero-rated.

What are the other local indirect taxes beside VAT?


  • turnover tax
  • excise taxes
  • tax on bank accounts
  • municipal taxes
  • stamp tax.

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Registration

Who is required to register for Argentinean VAT?


If businesses make taxable supplies in Argentina through a permanent establishment they will be required to register and account for local VAT.


Are there penalties for not registering or late registration?


There are penalties for failure to file tax returns based on the general terms fixed by the tax administration.


Is voluntary VAT registration possible for an overseas company?


No. Under Argentinean VAT legislation it is not possible for a non-resident entity to voluntarily register in Argentina and act as an established entity.


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 (for example international transport), in order to apply for VAT refund.

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VAT grouping

Is VAT grouping possible?


No.


Can an overseas company be included in a VAT group?


N/A.

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Returns

How frequently are VAT returns submitted?


Taxpayers are required to submit VAT returns on a monthly basis.


Are there any other returns that need to be submitted?


Yes, returns covering turnover tax and excise tax.


If a business receives a purchase invoice in foreign currency, which exchange rate should be used for VAT reporting purposes? (e.g. central bank’s exchange rate applicable on the date of the invoice)


The latest closing day exchange rate published by the “Banco Nacion” (national bank) should be used.  

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VAT recovery

Can a business recover VAT if it is not registered?


No, except few cases (for example international transport). See section 2


Does your country apply reciprocity rules for reclaims submitted by non-established businesses?


No.


Are there any items that businesses cannot recover VAT on?


There are certain items that businesses cannot recover VAT on. For example:


  • Exempt supplies: where VAT relates to both taxable and exempt supplies, you need to make an apportionment (pro rata rule).
  • Automobiles: amounts paid on the purchase, import, or rent (including leasing contracts) of automobiles can be claimed as tax credit only if the cost of acquisition, import or market price is equal or less than ARG20,000 (VAT net). If the value exceeds that limit, the tax credit can be only claimed up to this limit. When the automobiles have for the buyer the character of inventory or a key operational fixed asset (such as cars) this limitation will not be applicable. The restriction to compute the tax credit related to maintenance, repair and use of automobiles, which can be deductible with no limit, was lifted.
  • Business entertainment: VAT on services rendered by bars, restaurants, hotels, garages, clothes (except uniforms), is not recoverable.

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International Supplies of Goods and Services

How are exports of goods and services 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.


How are goods dealt with on importation?


When goods are imported into Argentina, import VAT and customs duties must be paid before the goods are released from customs’ control.


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


Services rendered and loans granted from abroad for which utilization is made in Argentina (import of services) by Argentinean VAT payers are taxable in the country.


In such cases, the local taxpayer must self-assess the VAT payment in the month immediately after the taxable event is completed, and will compute the VAT credit in the following month. This will be a pass-through cost for the local company so long as it is registered for local VAT purposes.

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Invoices

Is a business required to issue tax invoices?


Yes.


What do businesses have to show on a tax invoice?


Layout of invoices is strictly regulated.


A taxpayer is required to issue an invoice for each taxable transaction performed. If this requirement is not complied with, the purchaser is not entitled to the VAT credit otherwise arising from the purchase.


Invoices and similar documents corresponding to transactions made by a registered taxpayer with another registered taxpayer must show separately the relevant VAT. Transactions made by a registered taxpayer with a final consumer or a small taxpayer must not show separately the corresponding VAT.


Tax invoice should contain the following data:


  • date of issue
  • a sequential invoice number
  • taxpayer identification number (CUIT) and customer taxpayer identification number
  • supplier’s name and address
  • customer’s name
  • the quantity and nature of the goods/services supplied
  • unit price (exclusive of any VAT)
  • rate of any discounts (if not included in the unit price and if applicable)
  • the VAT rate applicable
  • the total amount price (including VAT)
  • issue authorization code or Electronic authorization code.

Can businesses issue invoices electronically?


Yes, it is mandatory for certain activities and optional for all.


Is it possible to operate self-billing?


No, it is not possible.


Can a business issue VAT invoices denominated in a foreign currency?


Yes it can. In this case the exchange rate must be displayed in the invoices.

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Transfers of Business

Is there a relief from VAT for the sale of a business as a going concern?


Under Argentinean law, TOGC is not subject to VAT if it is done within the framework of a tax-free reorganization as provided by art. 77 of the Income Tax Law.

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Options to Tax

Are there any options to tax transactions?


Individuals and companies engaged in small business activities and whose gross turnover does not exceed a certain threshold may be subject to a simplified regime (Monotributo) that combines income tax and VAT.

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Head Office and Branch transactions

How are transactions between head office and branch treated?


There are no special rules for VAT, since both are considered as different taxpayers for VAT purposes.

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Bad Debt

Are businesses able to claim relief for bad debts?


No.

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Anti-Avoidance

Is there a general anti-avoidance provision under VAT law?


In the absence or an invoice or similar document or were the price is less than the market value, this market price is taken as the taxable base.

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Penalty Regime

What is the penalty and interest regime like?


There are certain penalties for failing to fulfill formal obligations.


The penalty for failing to pay VAT due varies between 50 percent and 100 percent of the unpaid VAT.


In case of fraudulent practices, besides fines ranging from two to ten times the unpaid taxes, imprisonment can be imposed in certain cases.


Compensatory interest is at present 3 percent rate.

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Tax authorities

Tax audits


How often do tax audits take place?


Audits take place on a random basis or when a VAT recovery request is filed.


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


No.


Advance rulings and decisions from the tax authority


Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?


It is only possible to apply for a formal advance ruling. If the taxpayer applies for a formal ruling, the opinion of the tax authority is binding and must be applied.


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


Yes, they are to be found at: http://biblioteca.afip.gob.ar/

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Miscellaneous

In your country, are there unique specific indirect tax rules (regimes) that differ from standard indirect tax rules in other jurisdictions?


Sales of goods from the mainland to the special customs area are considered an export. Hence, refunds are possible.


Any activity carried out in the ex Territorio Nacional de Tierra del Fuego is exempt from national taxes.


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


Exemption for certain localizations (VAT and municipal tax)

 

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