Value Added Tax Law: Benefit of Allocation against other Taxes, Refunds or Transfer of Accumulated Technical VAT Balance for Developers of Activities that Qualify as a Public Service in the Energy Sector

Article 93 of law No. 27.430, which introduce diverse modifications to the Argentine Tax Regime, introduced a benefit under the second article, unnumbered, located following 24^th of the VAT Law. The beneficiaries are those who develop activities that qualify as a public service, that is, when their prices are reduced by the granting of subsidies, compensations or specific economic relief funds, carried out by the Argentine Government. The benefit allows for the accreditation, devolution or transference of the accumulated technical VAT balance (that is established in the first paragraph of Article 24 of the VAT Law), when its origins are the result of purchase, manufacturing, elaboration, or the definitive import of goods – except automotive – and construction work or services rendered (including the balance originated by a taxpayer or substitute obligors for the services rendered abroad and effectively utilized in national territory or services rendered in Argentina by a foreign party, respectively).

Considering that the subsidies that are granted to taxpayers do not generate fiscal debit, which in turn results in the decrease in the amount of technical VAT balance that is accumulated, this new benefit becomes more advantageous because of the free availability of the accumulated balance that it establishes. The benefit allows the application of the technical VAT balance to be accumulated in the taxpayers’ favor, to be allocated from other national taxes collected by the Argentine Tax aAuthority and to be refunded or transferred as long as certain requirements are met.

With this new resolution, the taxpayers that qualify as part of the public sector will be able to dispose much faster their accumulated technical VAT balance without the necessity of generating enough fiscal debits.

 Therefore, through the General Resolution No. 4530/2019 (“Resolution”), the Tax Authority established the mechanism, terms and conditions that beneficiaries must follow In order to apply.

 

 

 

1. Regulation of the benefit.

Article 2 of the Resolution establishes that benefit will only apply if the accumulated credit has been originated from operations destined to the development of the activity that qualify as public energy services and for which sums are received by way of subsidies.

Article 3 of said resolution, establishes that the technical VAT balance for which the benefit may be requested will be the one accumulated until the last fiscal period of the VAT of each year.

Article 4 of the Resolution lists certain formal requirements that taxpayers must follow to apply for the benefit.

2. Limits to the benefit. Terms and conditions for its utilization.

The amount of the benefit will be computed taking into account the credits created by the above mentioned activity without adding the credits created by the subsidies, tariff compensations and/ or funds due to economic assistance, made by the Argentine Government.

In the cases in which this benefit is an allocation against another taxes, this will not stand against an obligation which was incurred by another or in the cases in which the taxpayer act as a withholding or perceptual agent. Also, this benefit will not be applied to taxes whose objectives  are to finance funds for specific allocation or social security resources.

Moreover, this benefit will not be granted to credits that have had any differential treatment also rstablished in VAT law or in any other law. Also this regime will have a maximum annual limit which will be set by the Minister of Finance, based on the general conditions of the budget revenue and a particular assignment mechanism.

Article 15, the annex of the resolution, establishes the terms and conditions for the utilization of the benefit.

3. Request of the benefit

Taxpayers that meet the requirements for this benefit must file a note with the same effects as an affidavit, meeting what is enumerated in the General Resolution No. 1128/2001, before the office of the AFIP in which they are enrolled.

 The note with the same effects as an affidavit, following art 7 of the resolution, must contain: 1) the year for which the benefit is being request; 2) the technical VAT balance accumulated each month, from the first fiscal period to the last of the year; 3) the amount of the required benefit to determine the accreditation, devolution or transference; 4) an affidavit regarding the taxpayer situation.

The presentation of the note must be accompanied by a public independent accountant[s certification, regarding the detail, existences and legitimacy of the accumulated balance. Also they are obliged to state the inexistence of any fiscal credits originated by the operations of purchase, manufacturing, elaboration, or the definitive import of automotive and about the effective allocation of the fiscal credits to the transactions that are destined to the development of the activities that qualify as public energy services and for which sums are received by way of subsidies.

Finally, art 8 rstablishes the time limit to file the note. It should be filed once a year in July of the year after the period they are applying for.

4. Intervention of the administrative judge.

When the presentation of the note is incomplete regarding the above mentioned elements, has an inconsistency or any formal deficiency in the data that it must contain, an administrative judge will intervene requiring within the next SIX (6) working days following the presentation that said mistakes are rectified. Article 10 and 11 of the resolution establishes the cases in which the administrative judge may intervene.

5. Requirement to the Secretariat of Energy

The Argentine Tax Authority will require from the Secretariat of Energy, for each applicant, at minimum, the following information: 1) if the applicant qualifies for this benefit and 2) the amount of subsides granted to the applicant in the period of their solicitation.

6. Notification of the amount fiscal quota per year

The amount of the fiscal quota per year that will be assigned to each applicant of the benefit will be notified to their electronic fiscal domicile. This amount may be detracted of their technical VAT balance of the affidavit corresponding to the fiscal period that is about to lapse. The amount will appear in the section “other concepts that decrees the technical VAT balance in favor of the taxpayer”, with the code 10: “art 93 law N° 27.430 – benefits for the energy sector”

7. Notification of the payment. Authorization of the accreditation and or transfer

Article 14 of the resolution provides that the administrative judge will issue a communique informing the amount authorized and, if applicable, the subtractions that are relevant.  The above mentioned communique will be notified to the applicant through some of the means stipulated in article 100 of Law N° 11.683 and will contain, if required, the following data: a) the amount of the benefit that was required; 2) the date of the formal admission of the application; c) the justification that endorses the practice subtraction; d) the amount of the benefit authorized for accreditation, devolution or transference.

Finally, when a partial detraction of the amount applied should proceed, said subtraction will operate in the following order: A) against devolutions; B) against transfers: C) against accreditations.