In focus
On 1 July 2024, the Resolution was published in the Official Gazette, by which the FTA modified, until 31 December 2024, the VAT and income tax advanced payment regime on the importation of certain goods.
The Resolution states the following:
- Suspended until 31 December 2024, inclusive, are the application of the exemption certificates for the payment of: (i) income tax advanced payments due on the importation of certain goods; and (ii) VAT advanced payments due on the importation of certain goods.
- Until 31 December 2024, inclusive: (i) income tax advanced payments due on the importation of certain goods will not be deductible in the calculation of the monthly payments on account of the income tax to be paid annually; and (ii) VAT advanced payments due on the importation of certain goods may be computed as tax credit without any restriction.
- Excluded from such regime are: (a) imports for consumption made by micro and small companies that have a "MiPyME" certificate in force at the time of importation; (b) imports for consumption made on behalf of the National State; and (c) imports for consumption exempted from national taxes by Law No. 27,701.
Effects
The application of the Resolution in many cases could imply an increase in VAT and income tax credit balances.
To provide the real magnitude of the impact of the Resolution, we have included a description of the import duties and taxes payable upon the importation of goods.
Importation of goods into Argentina is governed by the Customs Code (Law No. 22,415), its regulatory Decree No. 1001/82 and other regulatory provisions issued by the Customs Authority. Import duties generally range from 0% to 35%, calculated on the C.I.F. value of the goods. By means of Law No. 24,425, Argentina approved the World Trade Organization Agreement and the Uruguay Round of the GATT, including the valuation rules.
In addition to the import duties, an importer is required to pay: (i) a charge called statistics fee of 3% of the customs value (normally C.I.F. value) of the imported products (subject to a maximum amount of USD 150,000, depending on the value of the imported goods; (ii) Value Added Tax, at the applicable rates, depending on the tariff classification number of the goods to be imported, the aggregate of the C.I.F. value of the products, the import duties, and the duty for statistics; (iii) a 10%, or 20% VAT advanced payment, plus a 6% or 11% income tax advanced payment applied on the importation of certain goods on the basis described in (ii); and (iv) an advanced Gross Receipts Tax.
The following formula shows how to calculate for the total import duties and taxes for a shipment imported into Argentina.
Import duty + statistics fee + Value Added Tax + VAT advanced payment + income tax advanced payment + advanced Gross Receipts Tax = total import duties and taxes
- Import duty = (value of merchandise + freight + insurance) x (duty rate, 0% to 25%)
- Statistics fee (if applicable) = [0.5% of (value of merchandise + freight + insurance)]
- Value Added Tax = [(value of merchandise + freight + insurance) + import duty + statistics fee] x 21% or 10.5%, as applicable
- Income tax advanced payment = [(value of merchandise + freight + insurance) + import duty + statistics fee] x 6% or 11%, as applicable
- VAT advanced payment = [(value of merchandise + freight + insurance) + import duty + statistics fee] x 10%, 20% as applicable
- Advanced Gross Receipts Tax = [(value of merchandise + freight + insurance) + import duty + statistics fee] x applicable rate
VAT impact
Among other taxable events, VAT is levied on the importation of goods as described in 3. and 5. above. In such cases, the local importer will be obliged to pay the FTA in cash the VAT arising from the importation of goods (VAT debit). However, it will be entitled to compute a VAT credit for the exact same amount to offset the VAT collected from customers on transactions subject to VAT.
Normally, if certain requirements are met, importers of goods are entitled to apply for VAT exemption certificates in order to be exempted from the obligation to pay the VAT advanced payments on certain definitive import operations.
According to the Resolution, until 31 December 2024: (a) the VAT exemption certificates will be suspended (therefore, importers of goods will have to pay the VAT advanced payment described in 5. above); but (b) the VAT advanced payment may be computed as a VAT credit without any restrictions.
Income tax impact
Corporate taxpayers are required to pay 11 monthly payments on account of the income tax liability of the fiscal year. For the calculation of such monthly payments, the income tax advanced payments described in 4. above, among other items, are deducted from the taxable basis. This means that the final amount of the 11 monthly payments is calculated after the deduction of, among other items, the income tax advanced payments described in 4. above.
Normally, if certain requirements are met, importers of certain goods are entitled to apply for income tax exemption certificates in order to be exempted from the obligation to pay the income tax advanced payments on definitive import operations of certain goods.
According to the Resolution, until 31 December 2024: (a) the income tax exemption certificates will be suspended (therefore, importers of goods will have to pay the income tax advanced payment described in 4. above); and (b) income tax advanced payments described in 4. above will not be deductible in the calculation of the monthly payments on account of the income tax to be paid annually.
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