Tax-related matters of the Audiovisual Communication Services Law

In “Regulation of the Audiovisual Communication Services Law No. 26,522” published in Marval News # 97 (September 2010), we mentioned the recently enacted Decree No. 1225/2010, which regulates several aspects of this Law. This time we will only focus on the tax-related aspects of the Regulation.

1. Audiovisual communication services tax determination

In order to estimate the ACS Tax, the amount paid as turnover tax in the Provinces and/or the City of Buenos Aires shall be deducted from gross turnover (Section 94).

Licensees, concessionaries, authorized parties and owners of audiovisual communication services that are registered as responsible to pay Value Added Tax and that are subject to the ACS Tax, may compute all the ACS Tax sums’ (Section 94) as payments on account of VAT.

2. Tax base for foreign broadcasters

In order to estimate the tax base for foreign broadcasters, the Decree provides that the turnover of any act or activity established by law as a taxable event capable of producing effects in Argentina —regardless of its place of origin, nationality or residence of the holder or the parties involved in the transactions— must be taken into account (Section 96). According to the legal bases of Law No 26,522, the Decree has adopted a criterion of Argentine source similar to the one provided by the Income Tax Law.

3. Deductibility of expenses of advertisement from the Income Tax

In “Limitation to deduct certain advertisement expenses” published in Marval News # 88 we analyzed the restrictions provided by Law No. 26,522 to deduct advertisement expenses. According to the Law, taxpayers who invest in advertisement to be broadcast in non-national channels may not deduct such expenses from taxable income under Income Tax Law. In other words, advertisement expenses may only be deducted (under terms of mentioned Section 80), if that expense is directed to a broadcasting company which qualifies as a national channel.

The Decree provides that Treaties with foreign countries must be considered, if applicable (Section 83).