VAT legislation also includes ‘digital transactions’ (e.g. digital services, hosting, on-line technical support, software services, Internet services) provided from abroad as a taxable event. These types of services are currently subject to VAT at a 21% rate if they are supplied by a non-resident entity to an Argentine customer, provided that they are effectively used in Argentina. By imposing new tax compliance burdens on U.S. digital service providers, Argentina’s policy https://www.vatupdate.com/2019/10/09/argentina-implements-digital-vat-book/ creates an opportunity for Chinese companies to expand their market share. Many Chinese firms, particularly those with state backing, are smaller or operate through local partnerships, making them less affected by VAT compliance shifts. As U.S. firms face new administrative costs and potential market frictions, Chinese digital platforms can gain a relative advantage, positioning themselves as more accessible and adaptable players in Argentina’s growing digital economy.
Taxation Administration in Argentina
VAT is applied on the sale of goods and services within Argentina, as well as on imports. The system aligns with global standards but includes specific requirements unique to the country. The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.
Implemented Resolution 5319/2023, including VAT on digital sales transactions
While tax treaties promote economic cooperation and prevent double taxation, foreign trade taxes contribute to the regulation and control of trade flows. In addition to tax treaties, Argentina also has a robust system of foreign trade taxes. These taxes, often referred to as customs duties or import and export taxes, are imposed on goods and services crossing the country’s borders. These tax treaties provide guidelines for the allocation of taxing rights and mechanisms for the exchange of information between Argentina and its treaty partners.
- In this guide, we will delve into various aspects of the Argentina tax system, including federal, provincial, and municipal taxes.
- Be the first to know about top business trends that can drive success for your company.
- These should include detailed information about each transaction, sales, costs, exits, and returns, where applicable.
- Exports of goods are exempt, and certain industries are subject to a reduced tax rate.
- The document will record the amount received in a discriminated manner and with express mention of this regime.
- In what follows, we provide you with a bullet point summary of the key measures under each of the three pillars of ViDA.
- Since it is the credit card or financial institution that should withhold VAT, or the recipient that should collect and remit the VAT, the non-resident digital service provider should not need to register for VAT in Argentina.
- There will be no possibility to continue issuing summary invoices for a calendar month as it goes against the aim of the almost real-time reporting system.
How should VAT be displayed on the invoice?
These should include detailed information about each transaction, sales, costs, exits, and returns, where applicable. It is good to know that VAT returns can be prepared and submitted with the help of our specialists, to avoid possible errors that may occur along the way. Considering the details above, you can get an idea about Argentinian VAT registration for a foreign company.
- The international transactions to be reported are those carried out during the fiscal years of the reporting entity that close on or after 1 August 2022.
- This rule applies to services supplied by non-resident entities to customers in Argentina.
- It has included selling food and other products for human consumption, beverages, personal hygiene, and cleaning items under its scope.
- By eliminating or reducing double taxation, these treaties offer clarity and certainty to individuals and businesses engaged in cross-border activities.
- Overall, double taxation agreements play a crucial role in facilitating international trade and investment by providing certainty and clarity in the taxation of cross-border transactions.
Services
The implementation of these changes will have an impact on all taxpayers doing business in the EU irrespectively of size and industry. Stay up to date with the latest tax and compliance updates that may impact your business. Those taxable persons using “Fiscal Controllers” documents of “New Technology” to comply with the provisions of the preceding paragraph must use the section “Other Taxes” on the document. Employee contributions are also an integral part of the social security system in Argentina. These contributions are deducted from the employees’ monthly salary, subject to a certain cap. By contributing to the system, employees gain access to benefits such as healthcare coverage, retirement pensions, disability benefits, and more.
What if I already use electronic invoicing?
- This includes internet services, software, technical support online, and other digital services.
- VAT registration is voluntary for foreign businesses established in Argentina and offering digital products and services.
- As summarized in our previous blog, on 8 December 2022 the EU Commission published one of the biggest VAT law change proposals.
- Additionally, we will explore the municipal fees that municipalities impose for services like lighting and garbage collection.
- This shift weakens U.S. dominance in the region while allowing China to strengthen its influence in Latin America’s digital services sector.
- Otherwise, the Argentine recipient should pay the VAT to the tax authority (self-assessment).
- As of September 1, 2024, the VAT withholding regime is not applicable to payments made through electronic systems.
- In order to minimizing the administrative burden for taxable persons, the reporting system will take advantage of the issuance of an electronic invoice to automate the process of reporting.
These incentives not only provide financial relief but also contribute to the development of strategic industries and the overall progress of the country. In this guide, we will delve into various aspects of the Argentina tax system, including federal, provincial, and municipal taxes. We will explore the different taxes imposed by the Federal Administration of Public Revenue (AFIP), such as income tax and value-added tax (VAT). Furthermore, we will examine the tax systems imposed by each province, including taxes on gross income, real estate, and business turnover.
Taxation Modes in Argentina
Employers in Argentina have the responsibility to contribute to the social security system on behalf of their employees. These contributions are calculated based on the employees’ total monthly compensation. It is important for employers to accurately determine and fulfill their obligations to avoid any penalties or legal issues. The fees charged by municipalities are determined at the local level and vary based on factors such as property value, location, and construction details.
Implications for U.S. Technology Companies
Regarding the internal documents of a company with economic activities in Argentina, these should also contain notifications regarding the VAT corrections, where applicable. This guide provides an in-depth overview of VAT (Value Added Tax) in Argentina, including applicable rates, registration requirements, invoicing rules, compliance obligations, and filing deadlines. It is designed for businesses engaging in transactions within Argentina or with Argentine customers. The liability for return filing and payment of taxes does not fall on the foreign service provider, but rather on the credit card or financial institution that withholds VAT, or the Argentine recipient that collects and remits the VAT. The non-resident digital service provider should not be required to file a VAT return in Argentina. Argentina’s tax treaties cover a wide range of areas, including income tax, capital gains tax, withholding tax, and more, allowing for the effective management of tax liabilities in international transactions.
Corporate – Other taxes
Furthermore, AFIP administers social security contributions, which include employer and employee contributions. It ensures that employers fulfill their obligations towards social security by collecting and allocating the necessary funds for pension, healthcare, and other social security benefits. Similar to the turnover tax, real estate tax is imposed by each Argentine jurisdiction. It is levied on the ownership of real estate located in the territory of the jurisdiction. The tax credit related to exports and other taxable activities can only be refunded in proportion to the exports, and can be fully refunded to a cap of 21% of the freight on board (FOB) value of the exported products.
Argentinian VAT registration for a foreign company
Excise taxes are typically imposed at the point of manufacture or importation of these products. In the city of Buenos Aires, the standard tax rate is 1% of the aggregate amount of the transactions, contracts, and deeds that are subject to the stamp tax. Nevertheless, input VAT related to these transactions can either be used as a credit against output VAT or refunded pursuant to a special procedure.
- According to the legislation in force in Argentina, VAT returns must be submitted every month.
- Import duties and export taxes can vary based on factors such as the type of goods, their origin or destination, and any applicable trade agreements.
- Argentina’s VAT system is governed by the National Tax Code and other VAT-specific laws.
- Nevertheless, input VAT related to these transactions can either be used as a credit against output VAT or refunded pursuant to a special procedure.
- By imposing new tax compliance burdens on U.S. digital service providers, Argentina’s policy creates an opportunity for Chinese companies to expand their market share.
- On 5 November 2024, the 27 EU Member States reached unanimous political agreement on the VAT in the Digital Age (“ViDA”) proposal.
- We will explore the different taxes imposed by the Federal Administration of Public Revenue (AFIP), such as income tax and value-added tax (VAT).
- VAT legislation also includes ‘digital transactions’ (e.g. digital services, hosting, on-line technical support, software services, Internet services) provided from abroad as a taxable event.
Turnover tax (gross income tax)
DRRs can be distinguished into Periodic Transaction Controls (e.g.. SAF-T) or Continuous Transaction Controls (e.g. real-time reporting or mandatory e-invoicing). When it comes to e-invoicing the solution can be built either with or without clearance. Clearance is defined in terms of the role of the central IT platforms set up by the tax authority. In a non-clearance e-invoicing system, the supplier is able to send the e-invoice directly to its customer without having to request any confirmation (e.g. token) from the tax authority.
AFIP also handles customs-related matters, including the collection of import and export duties. It establishes regulations and processes for customs declarations, inspections, and clearance of goods. By supervising customs operations, AFIP ensures compliance with trade regulations and manages the flow of goods in and out of the country. To determine eligibility for the simplified tax system, specific criteria related to revenue thresholds, business activity, and legal form must be met. The requirements and conditions for participation are established by the tax authority.
This number is made up of two identification digits – eight digits – and a validation digit (xx-yyyyyyyy-z). On 5 November 2024, the 27 EU Member States reached unanimous political agreement on the VAT in the Digital Age (“ViDA”) proposal. In what follows, we provide you with a bullet point summary of the key measures under each of the three pillars of ViDA. As summarized in our previous blog, on 8 December 2022 the EU Commission published one of the biggest VAT law change proposals.
Financial transaction information
Under this system, taxpayers are required to calculate and declare their own tax liability based on their assessment of income and other relevant factors. The role of AFIP is to review the accuracy and completeness of these declarations, ensuring the proper collection of taxes. The simplified tax system in Argentina offers a more streamlined approach for eligible taxpayers. An essential characteristic of this system is that qualified taxpayers are exempt from income tax, VAT, and certain contributions. Municipal fees play a crucial role in ensuring the proper functioning and maintenance of local infrastructure. By charging fees for services like lighting and garbage collection, municipalities are able to allocate resources more effectively and provide residents with essential services that contribute to their quality of life.
AFIP extends the implementation of the “Digital VAT Book”
By providing these incentives, the government aims to stimulate economic growth, attract investments, and create job opportunities in key sectors of the economy. AFIP’s role in tax administration is crucial for ensuring the effective functioning of the tax system in Argentina. By enforcing tax laws and regulations, AFIP contributes to the generation of public revenue, which is essential for the country’s economic development and provision of public services. The general tax regime in Argentina encompasses individuals and businesses that are subject to various taxes, including income tax, value-added tax (VAT), and property tax.
VAT registration is voluntary for foreign businesses established in Argentina and offering digital products and services. One of our Argentinian lawyers can tell you more about the VAT in Argentina and the rates imposed in 2025 for varied goods and services available for sale purposes. We have experts who can provide essential legal advice for international entrepreneurs who want to start a business in Argentina.
Together, these measures create a favorable environment for international business ventures, enabling companies to navigate the complexities of global trade while ensuring compliance with Argentina’s tax regulations. By implementing tax incentives and undertaking tax reforms, Argentina is striving to create a business-friendly environment, attract investments, and foster sustainable economic growth. These initiatives demonstrate the government’s commitment to promoting entrepreneurship, innovation, and development in the country. It is important to note that the simplified tax system is primarily designed to benefit small businesses and individuals with lower revenues or limited operations. This simplified tax structure aims to reduce administrative burdens and encourage compliance among smaller taxpayers. In addition to federal and provincial taxes, municipalities in Argentina impose fees for various services provided to residents.
VAT in Argentina in 2025 can be a matter that might concern you when starting a company here. On the other hand, citizens living here can choose us when applying for Argentine citizenship. We invite you to contact our law firm in Argentina and discover the legal services we can provide. We specify that in the case of services provided to another business or company, the latter can apply for the reverse-charge mechanism in terms of VAT, and therefore, there is no need to collect it from the respective client.
