New Amendment Extend PAIS Tax, Income Tax, and Personal Assets Tax Collection Regime, Impacting on the Acquisition of Foreign Currency

Decree No. 682/2022, issued by the Executive Branch, and General Resolution No. 5272 issued by the Argentine Tax Authority (AFIP), both published in the Official Gazette on October 13, 2022, extended the scope of the Tax for an Inclusive and Solidarity-Based Argentina (PAIS) to include new transactions and to modify the Income Tax and the Personal Assets Tax collection regimes applicable to transactions levied by the PAIS tax.

 

1. Background

 

In December 2019, Chapter 6, Title IV of the Social Solidarity and Productive Reactivation Law No. 27541 established the PAIS Tax, later regulated by Decree No. 99/2019 on December 27, 2019, and implemented by AFIP’s General Resolution No. 4659 on January 6, 2020.

 

Initially, the PAIS tax applied to the following transactions:

1. Argentinian residents’ purchase of foreign currency;
2. Foreign exchange transactions made by financial institutions for the payment of goods or services renderer abroad by means of credit purchase or debit cards;
3. Foreign exchange transactions made by financial institutions for the payment of services rendered by non-Argentinian residents by means of credit purchase or debit cards;
4. Acquisition of services abroad through travel and tourism agencies in Argentina.
5. Acquisition of passenger transportation services (by any means of transport) with an international destination,  if  paying the transaction  implied accessing the foreign exchange market to  acquire foreign currency, under the terms established by the regulations.

 

The tax rate was 30% for all the items. The taxable base the rate  applied to was the total sum of each transaction. For the transactions mentioned in item (e) above, the tax rate was the price charged by the transportation company, net of taxes and fees. For further information on this tax, see:  https://www.marval.com/publicacion/se-crea-el-impuesto-para-una-argentina-inclusiva-y-solidaria-13491&lang=en.

 

Additionally, in September 2020, AFIP’s General Resolution No. 4815 (as amended) established a collection regime on account of Income Tax and Personal Assets Tax for transactions subject to the PAIS Tax. Initially, the amount to be received was determined in all transactions by applying the 35% rate on the same basis ─in ARS─ of the PAIS Tax.

 

In July 2022, AFIP’s General Resolution No. 5232 increased such tax rate to 45% for those transactions included in subsections b), c), d), and e) of article 35 of the Law No. 27541.  For further details regarding this collection regime, see: https://www.marval.com/publicacion/la-afip-establecio-un-nuevo-pago-a-cuenta-del-impuesto- sobre-los-bienes-personales-o-del-impuesto-a-las-ganancias-13804&lang=en

 

2. Modifications introduced by the resolution and the decree

 

1. PAIS Tax

 

The decree incorporates article 13 bis to Decree No. 99/2019, to extend the scope of the PAIS Tax under the 30% tax rate to the foreign exchange transactions made by Argentinian residents for payments regarding:

a. acquisition of personal, cultural, and recreational services abroad, not including educational services; and

b. import of certain luxurious goods, according to their Mercosur Common Nomenclature tariff positions (i.e. caviar, certain vehicles and motorcycles, recreational boats, certain alcoholic beverages, watches, pearls, diamonds and other precious stones, machines for validating  cryptocurrencies, among others).

 

These amendments apply to transactions made on or after October 13, 2022.

 

Finally, it should be noted that these provisions do not modify the current treatment of digital services rendered from abroad, which are subject to Value Added Tax. The applicable tax rate for these continues to be 8%.

 

2. Income Tax and Personal Assets Tax collection regime

 

Besides updating the PAIS Tax collection regime established by AFIP’s General Resolution No. 4659 for new transactions levied by such tax, the resolution modifies and extends the Income Tax and Personal Assets Tax collection regime established in AFIP’s General Resolution No. 4815. A 25% advance payment will be added on top of the 45% advance payment in force for:

 

 

1. Foreign exchange transactions carried out by financial institutions on behalf of the acquirer, for paying goods and/or services rendered abroad, or by non-Argentinian residents, paid with credit purchase or debit cards, or with any other means, provided the monthly amount per subject is equal to or greater than USD 300.

If the monthly amount per subject is less than USD 300, the additional advance payment will not apply;

2. Acquiring services abroad contracted through travel and tourism agencies in the country, or for acquiring land, air, or water passenger transportation services for travelling abroad; and
3. Import operations of luxurious goods, i.e., operations included in Decree No. 99/2019, article 13 bis, paragraph b).

 

The amounts collected will be considered an advance payment of Income Tax or Personal Assets Tax -depending on the taxpayer’s the tax condition- and will be computed for the annual returns.

These provisions will be applicable to transactions carried out as of October 13, 2022.

 

3. Current situation of the PAIS Tax and the Income Tax and Personal Assets Tax collection regime

 

As a result of the amendments introduced by the decree and the resolution, the transactions levied by the PAIS Tax and the advance payment of Income Tax and Personal Assets Tax are subject to such tax and to the collection regime as indicated below:

 

Type of transaction	PAIS Tax	Original Advance Payment (*)	Additional Advance Payment (**)
Foreign exchange transactions for saving purposes or without specific destination made by Argentinian residents.	30%	35%
Foreign exchange transactions carried out by financial institutions on behalf of the acquirer for the payment of goods and/or services rendered abroad, or by non-Argentinian residents, paid with credit purchase or debit cards, or any other means of payment for a monthly amount lower than USD 300 per subject.	30%	45%
Foreign exchange transactions carried out by financial institutions on behalf of the acquirer, for the payment of goods and/or services rendered abroad, or by non-Argentinian residents, paid with credit purchase or debit cards, or through any other means of payment for a monthly amount equal to or greater than USD 300 per subject.	30%	45%	25%
Acquisition of services abroad through travel and tourism agencies in Argentina, or acquisition of passenger transportation services (by any means of transport) with an international destination.	30%	45%	25%
Imports of luxurious goods, including the operations in paragraph b) of article 13 bis of Decree No. 99/2019.	30%	45%	25%
Personal, cultural, and recreational services, excluding educational services.	30%
The amounts collected will be considered an advance payment of the following taxes, according to the tax condition of the taxpayer: (*) a. Taxpayers/consumers registered in the “Régimen Simplificado para Pequeños Contribuyentes” (“Monotributo”), which are not subject to Income Tax: Personal Assets Tax. b. Other taxpayers: Income Tax. If the payer is not subject to Income or a Personal Assets Taxes, and is consequently unable to compute the collected amount, they may request a refund at the end of that calendar year. (**) a. Individuals and undivided estates: Personal Assets Tax. Individuals subject to such tax may request a refund. b. Other taxpayers: Income Tax.