Amendment Extends Tax for an Inclusive and Supportive Argentina (PAIS Tax)

Decree No. 377/23 was published in the Official Gazette on July 24, 2023, extending the scope of the PAIS tax. As of it, purchasing foreign currency to pay for the import of goods and services will be taxed but for certain exemptions. The new tax rates go from 7.5% to 25%.

The Decree extends the application of the PAIS tax to include Argentinian residents purchasing foreign currency through the foreign exchange market to pay (a) services purchased abroad or in the country but provided by foreigners and (b) imports of goods.

The applicable tax rates will be 25% for purchasing foreign currency to pay services and 7.5% for purchasing foreign currency to pay imports of goods (except luxury goods, for which the PAIS tax rate is already 30%). Freight services abroad and other transportation services for import or export operations of goods will also be levied by the PAIS tax at a 7.5% tax rate.

In all cases, financial institutions intervening in the foreign exchange transaction will collect the PAIS Tax when the exchange transaction is made.

On the other hand, on July 25, 2023, the Argentine Tax Authority (AFIP) issued  Resolution No. 5393, establishing that no additional Income Tax or Personal Assets Tax advance payments will apply to the purchase of foreign currency through the foreign exchange market to pay services or imports of goods (except imports of luxury goods, which are subject to these advance payments).

This Resolution also raises from a 35% to 45% the collection rate of the advanced payment on Income Tax and/or Personal Assets Tax applicable to the purchase of foreign currency for non-specific purposes (e.g., savings).

Finally, the Decree also authorizes AFIP to establish advanced payments of up to 95% of the PAIS Tax for purchasing foreign currency to pay imports of goods. In this sense, the Resolution established a 7.125% rate for advanced payments of imports of goods in general, and a rate of 28.5% for imports of luxury goods. In both cases, this advanced payment must be made when the imports permit is officialized. The amounts paid will be considered an advance payment of the PAIS Tax when the importer purchases foreign currency in the foreign exchange market for importing.