Abstract
Until 1990, Argentina only taxed the supply of services that were exhaustively listed in the VAT Law; financial supplies were then beyond the reach of VAT. In September 1990, the Argentine Congress introduced a far-reaching amendment that extended the VAT scope to all supplies of services. Loan intermediary services are the most significant type of service within the financial supply category, and they are undoubtedly taxed with VAT as any other service supply in Argentina. For the specific case of financial supplies the VAT Law mandates that the time of supply is deemed to occur either at the expiration of the period in which the financial output must be paid, or at the date in which this output is fully or partially received, whichever occurs first. Loan intermediary services are subject to VAT if and when they are carried out in Argentina. Additionally, based on the destination principle generally adopted by the VAT Law, loan intermediary services received from abroad are also taxable when they are used or enjoyed in Argentina, and the recipient (borrower) is a registered VAT payer. The taxable amount is the gross interest received by a financial institution as consideration for the service provided. The standard VAT rate in Argentina stands currently at 21%. However, in the case of certain loan intermediary services a reduced 10.5% rate applies. Apart from VAT, in Argentina there is a separate and distinct indirect tax on gross turnover that is imposed by the provinces, with similar characteristics across provincial jurisdictions.
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Notes
- 1.
On 27 December 1973, the Argentine Congress approved Law No. 20,631, which introduced VAT (Argentine Official Gazette, 31 December 1973). The amended text of Law No. 20,631 (the consolidated text of the VAT Law) was approved by Executive Order 280/97 and published in the Official Gazette on 15 April 1997 [hereinafter VAT Law]; see http://infoleg.mecon.gov.ar/infolegInternet/anexos/40000-44999/42701/texact.htm.
- 2.
Executive Order 692/98; see http://infoleg.mecon.gov.ar/infolegInternet/anexos/50000-54999/51323/norma.htm.
- 3.
- 4.
Defined in the Argentine Customs Code. See http://www.infoleg.gov.ar/infolegInternet/anexos/15000-19999/16536/texact.htm.
- 5.
Law No. 23,871 approved by the Argentine Congress on 28 September 1990 (Argentine Official Gazette, 31 October 1990); see http://infoleg.mecon.gov.ar/infolegInternet/anexos/0-4999/271/norma.htm.
- 6.
VAT Law, Art. 3(e)(21).
- 7.
VAT Law, Art. 7(h)(16).
- 8.
VAT Law, Art. 5(b)(7).
- 9.
VAT Law, Art. 5(b)(7).
- 10.
VAT Law, Art. 1(d).
- 11.
Second Article added after Art. 65.
- 12.
- 13.
VAT Law, Arts. 10 and 11.
- 14.
Executive Order 1230/96; Cáceres and Dreiling (2004, p. 652).
- 15.
VAT Law, Art. 28, para. 4(d).
- 16.
VAT Law, Art. 7(h)(16).
- 17.
Executive Order 692/98, Art. 35.
- 18.
Executive Order 692/98, Art. 35.
- 19.
VAT Law, Arts. 12–17.
- 20.
Credit Card Law 25,065, Art. 37(c). See http://www.infoleg.gob.ar/infolegInternet/anexos/55000-59999/55556/texact.htm.
- 21.
VAT Law, Art. 10.
- 22.
VAT Law, Art. 3(e)(21).
- 23.
Leasing Law, Art. 1; see http://www.infoleg.gob.ar/infolegInternet/anexos/60000-64999/63283/norma.htm.
- 24.
- 25.
Executive Order 1038/00, Art. 9.
- 26.
Leasing Law, Art. 22.
- 27.
In Argentina there are no new motor vehicles priced below that amount so that the restriction is in fact a prohibition to offset the VAT input credit.
- 28.
Leasing Law, Art. 24.
- 29.
Leasing Law, Art. 25.
- 30.
Leasing Executive Order, Art. 13; see http://www.infoleg.gob.ar/infolegInternet/anexos/60000-64999/64908/norma.htm.
- 31.
VAT Law, Art. 5(e).
- 32.
VAT Law, Art. 3(b).
- 33.
Leasing Decree, Art. 10.
- 34.
Linares Bretón (1970).
- 35.
VAT Law, Art. 11, para. 3. As explained in Sect. 3.6.6, in Argentina construction and improvements performed on a real estate property by its landlord or a third party are taxed with VAT (VAT Law, Art. 3(b)) as long as: (i) the construction is done on a property owned by the taxpayer; (ii) the construction is performed by a ‘construction company’ (which is defined as one which engages in the activity for the purposes of profit); and (iii) the operation is performed with the purpose of receiving consideration from the future sale of the property. If these conditions are fulfilled, the VAT is due when the property is sold for consideration (unless the property had been subjected to a lease for a term of three years before the sale is perfected). Thus, while the construction company is executing the construction, it will start computing the input VAT from all the purchases of materials and services contracted; and at the time of selling the property, it will have to compute the output VAT of that sale operation. In the case where the construction company sells that property to a registered VAT payer, the VAT paid by the latter for the purchase will be computed as input VAT (provided that the good is directed to taxed activities). However, the VAT Law, Art. 11, para. 3, provides that if the registered VAT payer sells the property or changes its destination to a non-taxed activity within 10 years of directing it to taxed activities, that person will have to return the input VAT relevantly computed (i.e., adding as output VAT, the input VAT previously computed as a consequence of the purchase).
- 36.
Article 11.
- 37.
VAT Law, Art. 3(e)(21).
- 38.
Article 10.
- 39.
VAT Law, Art. 10.
- 40.
Chryse SA c/AFIP-DGI, Argentine Supreme Court, 4 April 2006 (Court of Appeals, Federal Administrative contentious Affairs, Courtroom III, 15 October 2002); Angulo J.P., et al., Argentine Supreme Court, 28 September 2010.
- 41.
- 42.
Article 8.
References
Cáceres, Alberto Ignacio and Dreiling, Paola Elizabeth, El Impuesto al Valor Agregado (La Ley, Buenos Aires, 2004)
Linares Bretón, Samuel F., Leasing: aspectos jurídicos, contables, impositivos y operativos, in: Revista jurídica argentina, Vol. 139 (La Ley, Buenos Aires, 1970) 999
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Teijeiro, G. (2017). Loan Intermediary Services: Argentina. In: van Brederode, R., Krever, R. (eds) VAT and Financial Services. Springer, Singapore. https://doi.org/10.1007/978-981-10-3465-7_3
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