Foreign Residents who Render VAT Taxable Services

SUMMARY

General Resolution 4356/2018 of AFIP (Argentina’s tax authority), published on December 11, 2018, regulated how substitute taxpayers for foreign parties providing taxable leases or services in Argentina must pay VAT. Lessees, service recipients, representatives and intermediaries resident in Argentina must calculate and pay the tax within 10 business days after the taxable event. If they are registered VAT taxpayers, they may claim the amount paid as a tax credit.

By means of General Resolution No. 4356/2018 (published in the Official Gazette on December 11, 2018 ) the Argentine Tax Authority (the “AFIP” after its acronym in Spanish) established the forms, terms and conditions that tenants, providers, representatives or intermediaries of foreign residents who render services taxed in Argentina should take into account to deposit VAT. It is important to remember that Law No. 27,346 (that amended the VAT Law) designated as Substitute Taxpayers tenants and service providers, as long as they are Argentine residents or they are domiciled in the country, and to intermediaries or representatives of foreign residents that perform those transactions on behalf of said foreign residents.
 

This General Resolution provides that substitute taxpayers must assess and pay the tax within: (i) 20 business days if the substitute taxpayer is the Argentine Government, a Province, Municipality or the City of Buenos Aires; or (ii) 10 business days, in all other cases.

An Argentine resident that, regarding the mentioned transactions, acts as final consumer or that is registered in the Special Regime for Small Taxpayers (created by Law No. 24,977) is not considered to be a substitute taxpayer;therefore, does not follow under the scope of the Resolution.

The tax and its compensatory interest (if applicable) must be paid through an electronic regulated procedure using the codes specified in the Resolution.

VAT must be calculated applying the corresponding rate on the net price of the transaction included in the invoice or in the equivalent document issued by the foreign resident. If no invoice or equivalent document existed or if such documents include a price that cannot be considered to be the current market value, it is presumed, unless proven otherwise, that the current market price is the transaction price.

The VAT paid by a substitute taxpayer that is a registered VAT taxpayer it is creditable as VAT credit in the tax return of the fiscal period in which the VAT was paid, if applicable.

The possible positive VAT balance must be considered as technical tax credit. Therefore, it must exclusively be offset against VAT debits of the subsequent fiscal period.

The provisions of General Resolution No. 4356 will enter into force 30 days after its publication in the Official Gazette (October 1,/2019). Nevertheless, for the past tax events (as of September 12, 2018) VAT must be paid until February 15, 2019 unless it has already been paid by the terms of General Resolution No. 549.

Frequently Asked Questions

Who are substitute taxpayers?
Lessees, service recipients, representatives or intermediaries resident in Argentina acting for foreign parties.

What is the deadline to pay the VAT?
10 business days after the taxable event, or 20 business days for government entities.

Who does not act as a substitute taxpayer?
Final consumers and those registered under the Simplified Regime (monotributo).