Argentina and the new tax legislation (VAT)
In Argentina the main tax to be considered by e-commerce merchants is VAT, known in some countries as a tax on goods and services (GST). And it was precisely this tribute that has undergone recent changes in its form of collection.
What will change with the new law?
Released in the first semester of 2018, new legislation regulates that the VAT treatment is applicable to digital services used in the country and provided by foreign entities. This new regulation established that the person responsible for informing and paying VAT is the recipient of the service. If a resident intermediary (such as a credit card company or a bank) is involved in a transaction, they will be required to act as a collection agent. If more than one intermediary is involved, the agent required to act as a billing representative will be the one with the closest business relationship with the digital service provider.
For digital services, the tax reform established a VAT for:
- internet and website services;
- remote system management;
- online technical support;
- online data storage and advertising;
- software as a service (SaaS);
- downloads of digital content (music, games, etc.).
Argentina’s Federal Public Revenue Administration (AFIP) issued a list of companies impacted by the new regulations. This information was published in the Official Gazette, General Resolution No. 4240, on 14 May 2018. Merchants mentioned specifically in this list are directly affected, but this lineup can be updated in the future.
What does this mean for your operation?
Argentina announced in December its intention to tax digital services provided by non-resident companies under Law 27,430. At the end of October 2017, it was revealed that non-residents who provide digital services for Argentine consumers would be subject to a 21% tax in 2018.
Collecting parties are obliged to pay this tax directly to the Argentinian authorities on behalf of these companies.
When does the new law take effect?
The validity of the new law was scheduled to come into effect as of February 1st 2018. However, this date remained irrelevant, since there was no billing mechanism to enforce it. Now the government has announced a new legislation (Resolution 4240) with more information about the tax collection process, which will take effect as of June 27th 2018.