Indirect tax ebook - Argentina

Tax rates 

In Argentina the following categories of VAT rates are applicable

• Standard rate 21% - all goods and services standard rated unless defined to be reduced rated or exempted.” 
• Reduced rate 10,5% ( see appendix I  ) 
• Special rate 27% ( see appendix I  )
• Exempt supplies ( see appendix II  ) 
• Zero rate supplies ( see appendix II  )

Appendix 1

Increased rate
The following services are subject to an increased 27% rate if they are rendered outside properties exclusively used as a dwelling, entertainment, summer homes or vacant land and the beneficiary of the service is a registered, non-registered or a small taxpayer: 

• telecommunication services, except services rendered by Encotesa or news agencies; 
• the supply of gas or electrical power, except public illumination; and 
• the supply of current water and sewage services including draining and cleaning of undrained wells, with certain exemptions.
  

The increased rate does not apply to services supplied to independent entities that resell the same services.

Reduced rate
A reduced 10.5% rate applies to: 

• sales or imports of life cattle and other derivatives which are fresh or frozen as well as of fruits and vegetables fresh or frozen under certain conditions; 
• imports of certain goods included in the tariffs list of the Common Nomenclature of MERCOSUR; 
• certain supplies of services related to the soil (e.g. preparation) and farming activities (e.g. sowing, harvest); 
• certain constructions relating to dwelling houses; 
• interest and commissions on loans from domestic financial institutions; 
• interest on loans from foreign banks located in a country the central bank of which has adopted the international supervision standards of the Basel Banks Committee;
• the processing and manufacturing of movable goods in Argentina by a third party, even if the movable property is fixed to immovable property. Such supplies do not include tax-free services supplied through the delivery of movable goods representing simply the material support in relation to a supply, subject to certain restrictions; 
• production and distribution of programmes, films and records of any type to be transmitted by radio or tv;
• transport services supplied by taxis and other means of transport if the distance travelled is more than 100 km; 
• specified supplies of books, newspapers and periodicals; and
• medical services in specific cases.
  
  

Appendix II

The VAT Law provides for two types of exemption, namely: 

• the exemption without credit for previously VAT paid where input VAT on purchases and imports is not creditable by the entrepreneur; and 
• the exemption with credit for previously VAT paid where the exempt transaction is subject to VAT at a zero rate, but the entrepreneur is entitled to recover the related input VAT previously paid on purchases and importations.

Exclusions
Transfers made as a consequence of qualifying "company reorganizations" (under income tax rules) are tax free.

Exempt goods
Imports, sales and production may be exempt when involving certain specified items, including:

• books, including electronic formats;
• retail distribution of newspapers and periodicals; 
• shares, bonds and securities;
• gold coins, gold bars and other coins; and 
• planes constructed and destined for the transportation of passengers and/or freight, and ships for the exclusive use in commercial activities or for defence and security.
  

Exempt services
Services are exempt from IVA in certain instances, including, amongst others:

• services rendered by the state, provinces, municipalities and institutions belonging thereto, with certain exceptions; 
• medical services in specified cases;
• transportation of persons and freight, including international transportation. Transport supplied by taxis and other means of transport is exempt only if the distance travelled is less than 100 km; 
• financial placements and services in those cases listed in the law (e.g. cash deposits with financial institutions, loans made between financial institutions, negotiable bonds publicly offered under Law 23,576); 
• services proper of directors, controllers and members of boards of stock corporations and those of managers and members of managing boards of other companies, associations, foundations or cooperatives; and
• the letting of immovable property relating to dwelling houses and to farming, the letting of immovable property to the National, Provincial or Municipal State, the letting of immovable property with monthly rents less than ARS 1,500, and, subject to conditions, relating to certain other services, except for conferences, meetings, parties and similar events.
  

As a rule, exemptions are not applicable when the exempt transaction is effected together with, or as a complement to, taxable services.

Exports
The following are treated as exports for VAT purposes: 

• the purchase and subsequent export by foreign tourists of Argentine products. The VAT on such purchases is refunded in accordance with the relevant regulations; 
• transactions in Argentina financed with gifts received under international cooperation agreements; 
• international transportation of passengers and cargo and services connected with the transportation of exports;
• bare boat charters (with or without purchase option) and the chartering for time or for trip of boats destined for international transportation, when the lessor is an Argentine ship-holder and the lessee is a foreign enterprise which is domiciled abroad; and
• the transformation, modification, repair and maintenance of (i) ships used for commercial activities, defence or security and (ii) planes and their parts.
  
  
  

As a result of the tax reform of December 1998, services rendered in Argentina which are effectively used or exploited abroad are no longer deemed to be supplies subject to VAT.

The exporters can elect to claim VAT refunds

Under Decree 959/01 published in the B.O. of 27 July 2001, applications from exporters are subject to other formal requirements in order to obtain the credit, refund or transfer of the tax on exports. These include an auditor's report signed by a public accountant to prove the reason for, and the legitimacy of, the VAT claimed. Exporters and vendors are jointly liable in respect of VAT fraudulently documented and not paid if there is a presumption of collusion between them.

If the credit belonging to a registered exporter cannot be taken as aforesaid or can only partially be taken, the balance may be credited against other national taxes or, in the absence thereof, refunded, or transferred to other taxpayers.

The credit, refund or transfer is limited to the result from applying the tax rate to the amount of exports carried out in each tax period.

• Introduction
• Scope
• Registration
• Tax rates
• Reporting & Filing
• General tax application/Time of supply
• Other local requirements

Last updated 11 November 2009

This information has been provided by Grant Thornton Argentina, a member firm within Grant Thornton International Ltd and is for informational purposes only. Neither Grant Thornton Argentina nor Grant Thornton International Ltd can guarantee the accuracy, timeliness or completeness of the data contained herein. As such, you should not act on the information without first seeking professional tax advice.
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