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The resolution contains the procedure that substitute taxpayers must follow for the payment of turnover tax withholding on taxable activities performed by nonresidents. If a substitute taxpayer is not registered with the tax authorities, the resolution lists other parties that may be substitute taxpayers.

On March 17, 2021, the Argentine Province of Buenos Aires published, in the Official Gazette, Resolution 9/2021 (the Resolution), which sets forth the procedure substitute taxpayers must follow for "turnover tax" withholding payments for taxable activities performed by nonresidents for tax periods beginning January 1, 2021 and onwards.

Background

The "turnover tax" is an indirect provincial tax imposed by the tax authorities in each of the 24 jurisdictions in Argentina (including 23 provinces and the City of Buenos Aires). The tax is levied on the sale of goods or the performance of services within a given jurisdiction. Each jurisdiction provides different tax rules in relation to the taxable base (deductions, expenses, etc.), tax rates, exemptions and promotional regimes applicable to each activity. The tax rates typically vary from 3.5% to 5% for the sale of goods and services.

In accordance with Section 95 of Law No. 10,397 of the Province of Buenos Aires, nonresidents subject to turnover tax in the province must have a substitute taxpayer withhold the tax. The substitute taxpayer may be the contractor, organizer, administrator, customer or payer of the items purchased. The Resolution establishes the procedure for the payment of the tax for tax periods beginning January 1, 2021.

This procedure does not apply for digital services provided by nonresidents when an Argentine credit card company or the Province of Buenos Aires Bank is involved in the payment. For more information on the turnover tax withholding regime for digital services provided by nonresidents, see Tax Alert 2019-2272.

Resolution 9/2021

General provisions

The Resolution states that those registered with the Federal Administration of Public Revenue (AFIP, in Spanish) as substitute taxpayers for any of the federal taxes must act as substitute taxpayers for nonresidents for turnover tax purposes in the Province of Buenos Aires.

When the taxpayer is not registered as a substitute taxpayer with AFIP, the following parties may act as substitute taxpayers:

• In the case of leasing real estate, the administrator; in the absence thereof, the tenant
• In the case of public shows, the payor; in the absence thereof, the organizer
• In the case of teaching or training activities, the local service recipient
• In the case of activities not previously listed, the party with the closest economic relationship to the foreign taxpayer

Digital services

In the case of digital services, when an Argentine credit card company or the Province of Buenos Aires Bank is not involved in the payment, the party that collects the payment must pay the tax, if the service provider is included in the list published monthly by the Province of Buenos Aires's tax agency.

To calculate the tax, the designated substitute taxpayer must apply the tax rate provided by the Province of Buenos Aires's Fiscal Code for the activity performed in the jurisdiction, which varies from 3.5% to 5%. For digital services, the withholding tax is 2% of the amount paid to the nonresident. If payments are made in foreign currency, the Resolution states that the selling exchange rate of the Argentine National Bank on the corresponding date should be considered.

The substitute taxpayer must file a tax return and pay the tax. The Resolution includes the information the substitute taxpayer must complete in the "Responsable Sustituto" service on the local authority's website (www.arba.gob.ar) to comply with this regime.

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