If the payment is made by credit card or financial institution, they should act as withholding agents and remit the VAT amount to the tax authority. Otherwise, the Argentine recipient should pay the VAT to the tax authority (self-assessment). Taxpayers that are registered for VAT or are exempt should report their purchases of digital services from non-resident suppliers electronically to the AFIP. In doing so, they will electronically generate the “Libro IVA digital” (Digital VAT Book).
VAT Rates in Argentina
Invoices must be generated through the Federal Administration of Public Revenue (AFIP) system, and all invoices must contain unique identification codes provided by AFIP. As of September 1, 2024, the VAT withholding regime is not applicable to payments made through electronic systems. The resolution also establishes that the only valid document to prove the payment of the perceptions will be the invoice or equivalent document (issued under the current invoicing regulations). The document will record the amount received in a discriminated manner and with express mention of this regime.
Argentina’s Cross-Border Data Transfer Regulation
The electronic invoice is mandatory in Argentina for all taxpayers, including self-employed workers. There are different types of electronic invoices, also called electronic receipts, depending on the tax status of both the issuer and the recipient. Their validity depends on approval by the Argentine Customs and Revenue Control Agency (ARCA). Argentina has recently expanded its perception VAT (Value Added Tax) collection regime to ensure efficient tax administration. It has included selling food and other products for human consumption, beverages, personal hygiene, and cleaning items under its scope.
Australia’s Digital Tax Policy
- VAT paid on purchases, final imports, and rental of automobiles not considered as inventory cannot be computed by the purchaser as a VAT credit.
- It is designed for businesses engaging in transactions within Argentina or with Argentine customers.
- The VAT Collection Regime in Argentina is a scheme by which the seller, designated as “Collection Agent”, charges the buyer an amount additional to the sale price.
- In doing so, they will electronically generate the “Libro IVA digital” (Digital VAT Book).
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.
Electronic invoices per default
It is important for individuals and businesses to comply with their tax obligations and keep abreast of any changes or updates to the tax laws. To ensure fairness and sustainability, the social security tax rates in Argentina are determined based on factors such as the type of activity and the annual sales of the company. These rates are periodically reviewed and adjusted as per the prevailing economic conditions and social security requirements of the country. Argentina has implemented tax incentives to promote specific activities and investments. These incentives may include tax credits, exemptions, or reduced tax rates for eligible taxpayers.
VAT on Digital Services in Argentina
As a result, the supplier will charge the fee on top of the purchase value, which includes the price and the VAT. The local entity must issue salary slips every month for each employee included on its payroll, considering the total compensation mentioned above. An expedient VAT recovery mechanism for VAT credit balances on certain infrastructure and investments in capital goods is available, to the extent that companies have not been able to recover the VAT within six months. VAT/IVA is administered by the Federal Administration for Public Revenues, while IIBB is administered by the revenue service of each province — Dirección General de Rentas. Our Argentine lawyer is ready to assist clients in any legal matter they may deal with.
Excise taxes
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 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.
Tag: Digital VAT Book
In Argentina, the Federal Administration of Public Revenue (AFIP) plays a crucial role in the administration and collection of taxes. AFIP oversees the general tax administration, customs, and social security, ensuring compliance with tax regulations and facilitating the smooth functioning of the tax system. However, reduced rates may apply to specific items, such as essential food products and certain services. VAT is collected at each stage of the supply chain, ensuring that taxes are paid on the value added at each step. The local employer must withhold income tax on an actual and monthly basis and make the corresponding payments to the tax authorities through monthly WHT returns.
What if I already use electronic invoicing?
Taxpayers who fail to specify taxes on their invoices will face penalties starting from the respective compliance deadlines. However, provinces and the City of Buenos Aires are encouraged to implement similar regulations for local taxes, such as the Gross Income Tax (IIBB). The mandate becomes mandatory for small businesses and self-employed individuals on April 1, 2025. According to the legislation in force in Argentina, VAT returns must be submitted every month.
- The local employer must withhold income tax on an actual and monthly basis and make the corresponding payments to the tax authorities through monthly WHT returns.
- Taxable persons will always be allowed to issue electronic invoices according to the European standard.
- Also, those interested in opening a company in Argentina can ask for a free case evaluation and enjoy personalized offers tailored to their business needs.
- However, the global trend shows a move from traditional VAT compliance towards real-time sharing of transaction-based data with tax administrations, often based on e-invoicing.
- AFIP also handles customs-related matters, including the collection of import and export duties.
- By providing these incentives, the government aims to stimulate economic growth, attract investments, and create job opportunities in key sectors of the economy.
- Argentina has entered into agreements on the avoidance of double taxation with several countries in order to facilitate cross-border trade and investment.
- These reforms aim to reduce tax evasion, increase tax revenues, and improve the overall effectiveness of the tax system.
Argentinian VAT registration for a foreign company
Finally, it is important to highlight that the tax authorities have to approve the tax credit to be refunded. Services rendered within the country shall be deemed to be exports if they are effectively applied or economically utilised outside the country. There is no facility for a non-resident company to obtain a VAT refund on expenses in Argentina, even in the case where the non-resident company has made no taxable supplies in Argentina. Companies may request refunds of overpaid VAT (VAT credits) or carry it forward to future return periods. Consumers will receive detailed information on the tax breakdown for each transaction, ensuring greater transparency in final prices.
- This system ensures that higher-income individuals contribute a larger proportion of their earnings in taxes.
- 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.
- In the meantime, it is also important to remember that Member States may not necessarily wait until the prescribed date in ViDA to introduce these changes.
- Otherwise, the Argentine recipient should pay the VAT to the tax authority (self-assessment).
- The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information.
- Each municipality sets its own fixed rates for these fees, which are then applied to residential, commercial, and industrial properties within their jurisdiction.
As such, the business owners must first apply for this regime, and obtain authorization from the tax authorities in Argentina. Once accepted, the tax authorities can assign an Electronic Authorization Code or CAE which must be incorporated in any electronic invoice issued. https://www.vatupdate.com/2019/10/09/argentina-implements-digital-vat-book/ All financial transactions of the companies must be registered, according to the laws of Argentina. This includes the VAT, an important tax imposed on most consumer goods and services. Therefore, any fiscal receipt or bill must also contain details about the imposed VAT.
These fees contribute to the funding of essential municipal services such as lighting, garbage collection, and maintenance of public spaces. Throughout this guide, we will discuss tax incentives, recent tax reforms, and international taxation in Argentina. We will also shed light on the social security taxes imposed on employers and employees, ensuring a comprehensive understanding of the Argentina tax system as a whole.
Individual tax rates range from 5% to 35%, and personal deductions are available (under certain circumstances). In order to apply for this regime, an authorisation must be obtained from the tax authorities. As a result, the tax authorities will assign an Electronic Authorization Code (Código de Autorización Electrónico or CAE), which is included in every issued electronic invoice.
- VAT is collected at each stage of the supply chain, ensuring that taxes are paid on the value added at each step.
- Stay up to date with the latest tax and compliance updates that may impact your business.
- The non-resident digital service provider should not be required to file a VAT return in Argentina.
- Many Chinese firms, particularly those with state backing, are smaller or operate through local partnerships, making them less affected by VAT compliance shifts.
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.
VAT Payments and Returns in Argentina
The same tax treatment can apply to other services in Argentina, like the ones offered by hotels, restaurants, and garages, for example. The 10.5% VAT rate also applies to the supply of advertising and publicity in some situations, medical assistance, housing construction, and sales and imports of bovine animals. In the meantime, it is also important to remember that Member States may not necessarily wait until the prescribed date in ViDA to introduce these changes. For example, several EU Member States have or are proposing to introduce mandatory e-invoicing and/or new reporting obligations including for example Germany, Belgium, Poland, France, and Spain. Therefore, it is important to monitor these requirements in the short term and in preparing for those changes, take account of the wider EU changes coming down the tracks. Argentina’s social security system plays a crucial role in providing financial protection and support to individuals employed under an employment contract within the country.
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.
The government has introduced measures to streamline tax processes, enhance taxpayer compliance, and reduce the administrative burden. Under these tax treaties, the participating countries agree to allocate taxing rights and establish mechanisms for the exchange of information. This helps to ensure that taxpayers are not subject to excessive taxation and promotes a fair and efficient international tax system. It’s important to note that the specific fees and rates can vary between municipalities, so it’s essential for property owners and residents to familiarize themselves with the regulations and fee structures of their local municipality.
This guide covers the essential steps ecommerce sellers need to take now that the UK has left the EU Customs Union and VAT regime to keep their cross-border sales going, avoid extra tax costs and frustrated customers. Non-established businesses — those with no fixed establishment in Argentina — must register as a taxpayer for VAT if they supply goods or services in Argentina. The measure requires invoices to include VAT and other indirect national taxes starting January 1, 2025. This change allows consumers to see the tax impact of each purchase, promoting transparency.
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.
Note that a Supreme Court decision has ruled on the non-applicability of this tax to Argentine branches of foreign companies. The levels of import duty currently range between 0% and 35%, except in cases where a specific minimum duty is applied or that involve merchandise with a specific treatment. These percentages were established considering the individual competitive conditions prevailing in different production sectors and the relative advantages of contributing to the introduction of equipment and technology for local industry. In general, merchandise originating from Latin America Integration Association (LAIA) countries is entitled to preferential duty.
In Argentina, the responsibility for VAT collection and remittance does not lie with the foreign service provider. 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. 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.
Exporters must file an export return with the tax authorities, reporting the VAT receivables related to their exports to be reimbursed on VAT paid in relation to the export operations. A report certified by a public accountant with respect to the value, registrations, and other characteristics related to the refund must be attached to the export return. Such purchases are considered as inventory and cannot be calculated by the buyer as a VAT credit.
Taxpayers using ARCA-approved electronic invoicing systems will see VAT discrimination reflected automatically in the XML file. This requirement should not apply to those registered for the simplified scheme (”Monotributo”). For periods up to June 2020 inclusive, electronic registration will continue as provided in Title II of General Resolution No. 3,685 and its amendments. Be the first to know about top business trends that can drive success for your company.
Regarding digital products for sale in Argentina, VAT is imposed depending on the number of sales registered in the country and the type of business, whether B2B or B2C. Thus, there is no threshold for VAT registration in Argentina if you sell such products. The standard VAT rate in Argentina is 21%, but there is also a higher rate of this tax, of 27%, which applies to the services offered by the suppliers of gas, energy, water, and mobile telephony. Discover in this article how the registration of VAT in Argentina in 2025 of local and international companies is done. Legal support and advice in this direction can be provided by our lawyers in Argentina.
This shift weakens U.S. dominance in the region while allowing China to strengthen its influence in Latin America’s digital services sector. When it comes to international taxation, Argentina has taken steps to ensure fair treatment of international transactions while avoiding double taxation. The country has established tax treaties with various nations, facilitating the smooth flow of trade and investment.
- The proposal changes the current situation, providing that electronic invoicing (without a clearing system and only structured electronic files) will be the default system for the issuance of invoices.
- The revenue collected from these federal taxes plays a vital role in financing public services, infrastructure development, education, healthcare, and other essential programs that benefit Argentine citizens.
- These incentives not only provide financial relief but also contribute to the development of strategic industries and the overall progress of the country.
- 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.
- There are penalties for late registration, which include being unable to operate any kind of commercial activity in the country.
- On 8 December 2022 the European Commission published the following proposals with regards to the digital reporting requirements and e-Invoicing.
The collection regime will only apply when each transaction amount exceeds ARS 3000. Taxpayers who issue invoices concerning these provisions must ensure compliance with the document data requirements, used as evidence of the collection for the final VAT calculation. The goal of these taxes is to regulate and control foreign trade, while also generating revenue for the government. They are typically levied as a percentage of the value of the imported or exported goods. The tax reform in Argentina includes measures such as digitalization of tax procedures, introduction of online tax filing systems, and strengthening of tax audit capabilities. These reforms aim to reduce tax evasion, increase tax revenues, and improve the overall effectiveness of the tax system.
These agreements provide clear rules for determining the allocation of taxing rights and specify the conditions for claiming benefits such as reduced tax rates or exemptions. They also establish procedures for resolving disputes between the tax authorities of the participating countries. Argentina has entered into agreements on the avoidance of double taxation with several countries in order to facilitate cross-border trade and investment. These agreements, commonly known as tax treaties or double taxation agreements, aim to prevent individuals and businesses from being taxed twice on the same income or profits. Each province in Argentina has its own tax system, independent of the federal tax regulations. These provinces levy various taxes on income, property, and business turnover, contributing to the overall tax structure of the country.