Tax for an Inclusive and Supportive Argentina (PAIS Tax) Incorporates New Taxable Events

Decree No. 377/23, published in the Official Gazette on July 24, 2023, partially modified Decree No. 99/19, which regulated the Social Solidarity and Productive Reactivation Law No. 27541. It especially modifies article 13 bis of that Decree, extending the taxable event of art. 35(a) of Law No. 27451, which taxes the purchase of foreign currency through the foreign exchange market.

First, the Decree introduces a tax at the rate of 25% on the purchase of foreign currency for “the acquisition of services from abroad (…) or the acquisition of services in the country provided by non-Argentine residents”.

The taxed services are:

The tax rate is 7.5% for purchasing foreign currency for “the acquisition of shipping, freight and other transportation services from abroad for the import and export of goods, or its acquisition in Argentina when they are provided by non-Argentine residents”, when the concept codes for foreign exchange purposes are S04, S30, and S31.

Second, the Decree introduces a new tax at a 7.5% rate for purchases of foreign currency to pay overall imports of goods. Nonetheless, acquiring foreign currency to pay imports of ‘luxury’ goods has been subject to the PAIS Tax at a rate of 30% since October 2022.

Payments of imports of gasoil, lubricating oil, and additives are exempted, as are supplies and intermediate goods directly or indirectly related to the basic food and beverage market basket, and goods used to generate energy (although the specific regulation for these is pending issuance). Law No. 27541 also exempts the purchase of drugs.

The import of services and goods are now taxed whether they take place in the general customs territory or in the special customs territory created by Law No. 19640. This tax applies to payments of imports of goods into free trade zones.

The Decree taxes goods imported under the temporary import regime for transformation and the “Aduana en Factoría” regime used by the automotive industry regime. However, paying for these imports may be excepted if: a) the import is paid after the exporter has complied with the mandatory repatriation of the export proceeds in accordance with foreign exchange regulations applicable to the transformed goods exported; or b) the payment of the import is being financed with a foreign advance or prefinancing.

In all cases, financial institutions will have to collect and deposit the PAIS Tax as agents of the payor.

The Decree authorizes the Argentine Tax Authority to establish advanced payments of up to 95% of the PAIS Tax when purchasing foreign currency to pay imports of goods.

On July 25, 2023, the Argentine Tax Authority regulated these advanced payments, establishing a 7.125% rate for advanced payments of overall imports of goods, and a rate of 28.5% for imports of ‘luxury’ goods. In both cases, this advanced payment must be made when the import permit is officialized. The amounts paid will be considered pre-payment of the PAIS Tax when the importer purchases foreign currency in the foreign exchange market for the import.

Finally, General Resolution No. 5393 raises from 35% to 45% the collection rate of the advanced payment on Income Tax applicable to the purchase of foreign currency for non-specific purposes (e.g., savings). The Resolution also establishes that purchasing foreign currency to pay foreign services and overall imports of goods (excluding ‘luxury’ goods) are not subject to the collection regime of advanced payments on Income Tax.