Valued Added Tax Law: Ruling of Regulation for Refund of Fiscal Credit for Acquisition of Capital Assets

Law 27.430 amended the Valued Added Tax law (the "VAT Law") adding a new unnumbered article after article 24. This new article allows the refund of the technical VAT balance originated by de acquisition of capital assets and was partially regulated by the Decree No. 813 in 2018. This new article has been treated in past newsletters such as: “Tax Reform: Amendment to the Valued Added Tax Law – Digital Services” and “Amendments to Regulatory Decree of Argentine Value Added Tax Law”..  We encourage our reader to check them out.

Since the issue of the resolution No. 4581/2019 (the “Resolution”) the regulation of this novel regime is complete; thus taxpayers are allowed to request for the refund of their technical VAT balance accumulated over six (6) monthly fiscal periods, as long as it is originated in the acquisition of capital assets.

The resolution provides for the procedure that taxpayers must follow to obtain the refund. These are the main stages of the procedure:

1. Generation of a pre-application between days 1 and 10 of December of each year;
2. The Argentine Tax Authority will inform each taxpayer which invoices and amounts they must include when requesting the refund. The amount may match with the one required by the taxpayer or reduced for different reasons. Among such reasons, it has to be taken into account that the benefit is subject to an annual quota that, for year 2019, has been established in a maximum amount of ARS 15.000.000.000 (around USD 270.200.000 at the current exchange rate) by the treasury department; and
3. To make a second application, confirming the first one, making the adjustment demanded by the Argentine Tax Authority and attaching, electronically, a special report prepared by a public independent accountant. This application can only be presented once a year, till the 31 of December. The application can be approved, observed or dismissed without intervention of an administrative judge (although the judge is entitled to intervene in certain cases).

The procedure ends when the Argentine Tax Authority notifies the amount that is allowed to be refunded. This will allow the taxpayer to make the refund effective or to compensate the technical VAT balance with other taxes.

The Resolution also refers that the annual quota has to be distributed taking into account, mainly, the seniority of the credits accumulated during the fiscal period in which they were originated. In the case of two credits with the same seniority, the quota will be proportional to the magnitude of the credits. If the yearly quota has already been met,  a taxpayer cannot obtain the full refund requested in that year. However, such taxpayer will be allowed to make a new application for amounts that were not refunded for the excess of the yearly quota, in the following year.

Finally, the Resolution provides that the system for uploading the data related to the refund application of the technical VAT balance accumulated during the year 2019 will be available in October 2019.