Argentina – New Collection Regime

On September 16^th, 2020, shortly after the Central Bank of Argentina’s announcement related to the new measures, General Resolution No. 4815/2020 was issued, creating a new Collection Regime to be applied on transactions falling under the Tax for an Inclusive and Solidary Argentina (PAIS) scope, in line with article 35 of Law No. 27.541, as amended.

We highlight the following features of this new regime:

1. Collections on Account: depending on the tax status of the person collected, collections made under this Regime shall be considered on account of the following taxes on the same tax year in which they were made:

a) Small Taxpayers’ Regime (RS) and those who are not subject to Income Tax: Payment on Account of Wealth Tax liabilities.

b) Remaining cases: Payment on account of Income Tax liabilities.

Should the collections made trigger favorable balances in the abovementioned taxes, they shall qualify as direct payment and shall be applied for the payment of other tax liabilities, in line with General Resolution No. 1658, as amended.

2. Collection Agents: these shall be the ones listed in article 37 of said law, depending on the type of transaction, i.e. (i) entities authorized by the Argentine Central Bank to operate in the exchange trade market; (ii) entities that make the payment collections to credit, debit and/or purchase card users with respect to transactions falling within the scope of said Law’s regime; travel and tourism agencies; and (iii) the transportation entities that collect the payments for such services).

If a payment grouper or system intervenes, the collection must be made by said intermediary.

3. Persons Subject to this New Collection: resident individuals, entities and undivided estates that perform any of the transactions listed in article 35 of the abovementioned Law (i.e. purchase/sale/exchange of foreign currency, acquisition of foreign services through local tourism and travel agencies, acquisition of transportation services with foreign destination the payment of which must be made with foreign currency acquired in the official exchange market, etc.).

4. Amounts to be Collected: the amount to be collected shall be equal to 35% of the amount in Argentine Pesos that is detailed for each case by article 39 of Law No. 27.541 (i.e. amount of the taxable transaction, or the net price amount).

5. Collection Opportunity. Collection Evidence: the collection established by this regime must be performed at the time the withholding set forth by Law No. 27,541 is made, depending on the type of transaction (by the time the exchange transaction is effective; by the time the credit, purchase and/or card is paid – even when it is partially settled -, and when the debit in the relevant account is effective when a debit card is used for the relevant payment; and/or by the time the acquired service is collected – at the time of the payment of the first installment when it is partially paid -).

The collection set forth by this Regime must be consigned separately in the applicable supporting documentation, and with a special mention to this General Resolution, which shall constitute the supporting evidence of the collections suffered.

If a payment grouper or system intervenes, the collection must be made on the date in which the funds are affected by said intermediary for the relevant payment of the acquired good or service hired.

Payments made must be always be affected or allocated first to the “PAIS” withholding and then to the Collection established by this General Resolution.

The exclusion certificate regulated by General Resolution No. 830, as amended, shall not apply for these purposes.

6. Collection Remittance: collections made under this Regime shall be deposited and reported according to the terms, procedures and conditions stated by General Resolution No. 2233, as amended which regulate the Withholdings and Collections Control System (SICORE).

7. Refund Procedure: those who were subject to the collection established by this General Resolution and that do not qualify as Income Tax taxpayers or Wealth Tax taxpayers, and that, consequently, cannot compute such collections as payment on account of said taxes, are entitled to request a refund of such collection once the calendar year in which they were made ends.

8. Exclusions from this Collection Regime:

a) Health Care System expenses, acquisition of medicine, acquisition of books in any format, educational platforms and education aimed software.

b) Research associated expenses incurred by researches who carry out their activities within the National Government, Provincial Government and the City of Buenos Aires Government, and Municipalities, as well as within Universities and Institutions that are part of the Argentine University System.

c) Acquisition of equipment and materials from abroad for fire-fighting and civil protection by entities recognized by Law No. 25.054, as amended.