New Information and Tax Withholding Regimes for Electronic Payment Systems

The Argentine Tax Authority (the “AFIP,” after its acronym in Spanish) in Resolution No. 4614/2019 provided an information regime regarding tools and/or electronic applications related to movements of virtual and non-virtual assets. This Resolution was published in the Official Gazette on October 25, 2019, and is currently in force, applicable to the operations carried out as of November 1, 2019.

AFIP Resolution No. 4622/2019 provides for a tax withholding regime of the Income Tax (“IT”) and the Value Added Tax (“VAT”) related to electronic payment systems. This Resolution was published in the Official Gazette on October 30, 2019, and amended by Resolution No. 4636/2019 (published in the Official Gazette on November 25, 2019).

Information regime

According to the AFIP, this regime obeys the need to set new measures that guarantee the transparency and traceability of operations made electronically or online. It aims to control of taxpayers’ compliance with their tax obligations.

AFIP’s Resolution provides for two information regimes, regarding:

1. Services of processing payments through digital or electronical platforms, made through electronic and/or virtual support, and
2. Services of administration, management, control or processing of asset movements.

 

The informative regime provided in Section (i) applies to the administrators of the services of processing payments through digital or electronical platforms, made through electronic or virtual support (collecting entities) residents or those domiciled within Argentina.

The informative regime would be applicable, among others, to “e-wallets” that group and intervene in the processing of payments, widely used nowadays. The Information Agents must provide the following information:

1. Tax ID, item code and Bank Identification Number (“CBU”) or Virtual Identification Number (“CVU”) of the sellers, locators and/or service providers adhered to the electronic payment management system;
2.  The amount of the commissions charged for the service of electronic payment management that they offer, and
3. The total amount of the operations carried out by the sellers, locators and/or service providers adhered to the electronic payment management system.

The informative regime provided in Section (ii) applies to those who administer, manage, control or process asset movements through electronic or digital management platforms, on behalf of and by order of human and legal persons resident in Argentina or abroad.

In this sense, the “exchanges”, platforms that facilitate the means for buying and selling crypto assets, are one of the possible subjects affected by the informative regime.

The Financial Entities (regulated under Law No. 21,526) are expressly excluded from this informative regime regarding the operations that they report under AFIP Resolution 4298 (Information Regime for Capital Market Entities).

The Information Agents must provide the following information:

1. The list of accounts with which each of the clients are identified (and the modifications that occur); and
2. Total amounts (in Argentine pesos) of income, expenses and monthly final balance of the accounts indicated in subsection (a).

The AFIP’s Resolution indicates the conversion method for the amounts expressed in foreign currency and for those expressed in digital currency or cryptocurrency.

In addition, Section 5 of the AFIP’s Resolution provides all the information that should be reported by the Information Agents, regarding:

- Accounts to report;

- The movements operated in said accounts; and

- Individuals involved in these accounts (specifying whether they are residents or foreigners, and –if foreign- if human or legal person).

For both informative regimes, the information must be provided on a monthly basis (until the 15^th day of the month following the monthly period informed) through the electronic transfer of data (with Tax Code through the service “Submission of Affidavits and Payments”) or exchange of information (through “webservices” “Submission of Affidavits – TaxPayer profile”).

Although these informative regimes are already in force, to date the AFIP’s microsite website “Electronic and digital management platform” (provided in the AFIP’s Resolution) is not yet live.

Tax withholding regime

According to the AFIP, this regime aims to increase the control of the operations carried out through technological funds transfer platforms, as well as reducing the possibilities of tax evasion.

The AFIP’s Resolution provides for this new IT and VAT tax withholding regime, for those who administer electronic payment and/or collection services on behalf of third parties, including through the use of mobile devices and/or any other electronic support, including virtual ones.

The withholding regime will be applicable to the discounts made to any merchant, lessor, and/or renderers of services for the use of said payment systems.

The AFIP’s Resolution sets as the withholding agents, the administrators of electronic payment and/or collection services on behalf of third parties (including, for example, subjects who manage “e-wallets”); and are subject to withholdings (for the use of electronic payment systems): merchants, service lessors and service providers; provided that (a) they are registered with VAT, or (b) if they cannot prove such registration, are exempt or, where appropriate, registered under the Simplified Tax Regime (“Monotributo”) and carry out operations on a regular basis.

It will be understood that the subjects mentioned in section b) carry out operations on a regular basis (as of December 1, 2019), when it is verified that the sales of movable assets and services rendered, charged through the electronic payment and/or collection services mentioned above:

1. They are equal to -or greater than- the amount of TEN (10) and

2. The total amount is equal to -or greater than- ARS 50,000.

This withholding regime excludes (a) Micro Companies and (b) Potential Micro Companies.

The regulation foresees that the exclusion certificates issued under Section 38 of AFIP’s Resolutions No. 830 (IT Withholding Regime) and No. 2226 (VAT Withholding Regime) will be valid for this new withholding regime.

Finally, the AFIP’s Resolution clarifies that the withholding will not be applicable when funds are settled to subjects that administer electronic payment and/or collection services or to entities that administer payment systems with credit cards, purchase and/or payment. Likewise, we highlight that AFIP’s Resolution No. 4633/2019, published in the Official Gazette on November 21, 2019 also excludes subjects who administer electronic payment and/or collection services on behalf of third parties of the VAT and IT withholding regimes, applicable to payments made to merchants, lessors or service providers adhered to payment systems with credit, purchase and/or debit cards.

The tax withholdings must be made at the time of payment of the settlements for  operations carried out by the users of the electronic payment systems. In order to define the concept of “payment”, the resolution refers to the IT Law (“ITL”). Therefore, there will be payment when charged or paid in cash or in kind and, in cases where, if available, it has been credited to the account of the holder, or with the express authorization or its tacit agreement, they it has been reinvested, accumulated, capitalized, put in reserve or in a repayment or insurance fund, whatever their denomination is, or management of them in any other way.

The Withholding Agents must verify the tax condition of the subject to whom the withholding is made (according to the AFIP’s Resolution No. 1817).

The withholdings to be made, both VAT and IT, will be determined by applying the following tax rates on the net amount to be paid before the calculation of other tax withholdings (whether national, provincial and/or municipal):

For VAT:

1% - VAT registered taxpayers if (a) the electronic payment was made through a credit card and/or purchase and (b) the merchant is included in the Appendix I of AFIP’s Resolution No. 2854, or is a gas station and retail outlet (authorized to function in the municipal or communal area and registered in the Oil Business Industry established by Resolution No. 419, August 27, 1998 by the former Energy Secretariat).

3% - VAT registered taxpayers when the payment is made through a credit or purchase card.

0.5% - VAT registered taxpayers when the payment is not made through a credit or purchase card.

10.50% - Merchants that do not prove their quality as VAT registered taxpayers, their exemption, and that said regulation does not apply to them or they are subject to the Simplified Tax Regime, that carry out operations on a regular basis.

For Income Tax:

1% - VAT registered taxpayers when the payment is made through a credit or purchase card.

0.50% - VAT registered taxpayers in the remaining cases.

2% - Subjects exempt or not reached in VAT.

For those who are subject to the withholding regime, such withholdings will be considered as tax paid and will be credited in tax return of the fiscal period in which they were practiced. Exceptionally, and only regarding VAT, it may be computed in the tax return corresponding to the first deadline that operates after the tax withholding was made, as long as the taxable event had taken place in a previous fiscal period.

The AFIP’s Resolution provides that both payment and information of the withholdings performed will be made in accordance with the provisions of the AFIP’s Resolutions No. 2233 (SICORE) and No. 3726 (SIRE).

The AFIP’s Resolution No. 4636 has modified the entry into force of the Withholding Regime (currently in force as from November 25, 2019) and is applicable for payments made as of:

a) June 1, 2020, inclusive, regarding the electronic means of payment Immediate Debit (DEBIN) and Immediate Electronic Payment (PEI).

b) December 16, 2019, inclusive, for the rest of the electronic means of payment.

The AFIP’s Resolution No. 4636 provides the obligation to reimburse the amounts that have been withheld between November 19, 2019 and November 25, 2019 (as a consequence of the modification of the date of enforcement of the withholding regime).

Finally, the total or partial breach of this withholding regime will result in the sanctions provided for in Law No. 11,683.