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VAT on Cross-Border Digital Services in Argentina
Argentina introduced special VAT rules for digital services provided by non-residents in 2017. Under the digital service rules in Argentina, VAT is not collected and remitted by the supplier. If the payment is made by credit card or financial institution, they should act as withholding agents and remit the VAT amount to the tax authority. Otherwise, the Argentine recipient should pay the VAT to the tax authority.
Digital Services in Scope
A digital service is taxable in Argentina if it is supplied by a non-resident and used or effectively exploited within the jurisdiction.
The Argentinean law gives an exemplary list of what is considered a digital service:
- The provision and hosting of computer sites and web pages, as well as any other service that offers or facilitates the presence of companies or individuals on an electronic network.
- The supply of digitized products in general, including, but not limited to, software, its modifications, and updates, as well as access to and downloading of digital books, designs, components, models, etc., reports, financial analyses, or market data and guides.
- Automated remote maintenance of software and hardware.
- Remote system administration and online technical support.
- Web services, including but not limited to data storage with remote or online access, in-memory services and online advertising.
- Software services, including, but not limited to, software services delivered over the Internet ("Software as a Service" or "SaaS") through cloud-based downloads.
- Accessing and downloading images, text, information, video, music and games, including games of chance.
- The provision of databases and any services automatically generated by a computer, via the Internet or an electronic network, in response to specific data input by the customer.
- The services of online clubs or dating websites.
- The services of blogs, magazines or online newspapers.
- The provision of internet services.
- The provision of distance learning or tests or exercises administered or corrected by automated means.
- The granting, for consideration, of the right to market a good or service on a website operating as an online marketplace, including online auction services.
- Data manipulation and data processing over the Internet or other electronic networks.
Determining the Location of the Argentinian Consumer
If the recipient is a consumer or an exempt or non-taxable entity, the service is considered to be used or effectively exploited in Argentina if -
- The IP address of the device used by the customer or the country code of the SIM card.
- The billing address of the customer.
- The bank account used for payment, the Customer's billing address as held by the bank or financial institution issuing the credit or debit card used for payment.
If the recipient is registered for VAT or under the simplified regime, it is considered to be used or effectively exploited in Argentina if -
- For services received by mobile phone: in the country identified by the mobile phone code on the SIM card.
- For services received through other devices: in the country of the IP address of the electronic devices of the recipient of the service.
VAT Registration for Foreign Companies
In Argentina, the responsibility for VAT collection and remittance does not lie with the foreign service provider. Since it is the credit card or financial institution that should withhold VAT, or the recipient that should collect and remit the VAT, the non-resident digital service provider should not need to register for VAT in Argentina.
VAT Returns and Payment of Taxes
The liability for return filing and payment of taxes does not fall on the foreign service provider, but rather on the credit card or financial institution that withholds VAT, or the Argentine recipient that collects and remits the VAT. The non-resident digital service provider should not be required to file a VAT return in Argentina.
Digital Reporting Requirements for Cross-Border Digital Services
Certain taxpayers are subject to digital reporting requirements in Argentina. Taxpayers that are registered for VAT or are exempt should report their purchases of digital services from non-resident suppliers electronically to the AFIP. In doing so, they will electronically generate the "Libro IVA digital" (Digital VAT Book).
This requirement should not apply to those registered for the simplified scheme (”Monotributo”).
Foreign Intermediaries Withholding VAT
Credit cards or financial institutions should be required to withhold VAT on the payment of digital services provided by a non-resident to an Argentine resident.