Argentina – Turnover tax regime for digital supplies suspended by the Tax Authority of Buenos Aires for an indefinite period

The Tax Authority of Buenos Aires (AGIP) has established a new turnover-based (i.e., provincial sales tax) withholding tax system for foreign suppliers of e-services to Argentinian private consumers located in Buenos Aires (B2C supplies).
According to initial provisions of the new regime, effective February 1, 2015, withholding agents (Argentine credit card companies) that collect payments for such services should withhold 3% turnover tax from the payments made by final consumers to the non-resident service providers. Credit card companies have, however, formally asked the AGIP for additional time to make the necessary amendments to their systems, enabling them to identify whether the payments relate to taxable services to be used in Buenos Aires. As a result, the AGIP has postponed the enactment of the new regime until withholding agents can adequately modify their systems to be able to collect the tax.

What does it mean for you?

The resolution does not provide an exact date of enforcement of the new regime. Non-establsihed businesses that supply e-services to private consumers located in Buenos Aires should monitor these changes closely and consider the impact on profit margins.

It is interesting to note, that in this case we have a provincial sales tax at hand (not even a consumption tax on national level), which clearly demonstrates the complexity non-resident B2C e-service providers face and must consider to set their prices right.

Further information is available from Ricardo Tavieres or Fernando Lopez Menendez of PwC Argentina, and we will keep you posted of the developments on the blog.

 

About Andras Salanki

Manager PwC Switzerland email: andras.salanki@ch.pwc.com Office: +41587924536

Andras Salanki is an international VAT advisor with 7 years of relevant professional experience. He spent one year on secondment in California, US, where he advised US multinationals on global VAT projects and also gained experience with IT and Internet companies based in the Silicon Valley.