December 13, 2018 Argentina issues VAT rules applicable to taxable events performed in the country by nonresidents Argentine resident beneficiaries of services provided by nonresidents should be prepared to pay the VAT on those services through an electronic transfer of funds and may include the VAT paid on their VAT returns as input VAT. On December 11, 2018, the Argentine tax authorities published, in the Official Gazette, General Resolution 4356/2018 (the Resolution), which implements the mechanism for the payment of value-added tax (VAT) on transactions carried out in Argentina by nonresidents. Background Through Law 27,346 and Decree No. 813/2018, Argentina established that, for services rendered and activities performed in Argentina by nonresidents, the Argentine beneficiaries, recipients, lessees, borrowers, agents and intermediaries must pay the VAT as substitute taxpayers. In particular, the Decree clarified that resident beneficiaries, intermediaries, etc. will not be required to act as substitute taxpayers when they qualify as end-consumers or are registered under the Simplified Taxpayers' System; in other words, only VAT-registered taxpayers must pay the VAT under these rules. In addition, it clarified that the VAT must be paid within 10 business days of a transaction that results in a "taxable sale" (i.e., the completion of the services or the collection of the payment for the services, whichever occurs earlier). Resolution 4356/2018 The new rules require the substitute taxpayer to pay the VAT via an electronic transfer of funds through the internet, as established by the Federal Tax Authorities (AFIP, by its acronym in Spanish). The tax is calculated by applying the tax rate to the net price of the transaction indicated on the invoice or equivalent document issued by the foreign service-provider. The substitute taxpayer may include the tax paid as input VAT on the VAT tax return for the month in which the tax payment was remitted. The VAT paid is not withheld from the payment to the foreign service-provider. The provisions of the Resolution will enter into force 30 business days after its publication in the Official Gazette, and the tax will be generally payable within 10 business days from the moment in which a transaction results in a taxable sale. For services that generated a taxable sale between September 12, 2018 and the effective date of the Resolution, however, substitute taxpayers must pay the VAT due on or before February 15, 2019. Companies doing business in Argentina should review the effects of the new tax rules on their operations and activities. ———————————————
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