Creation of Mining Tax Registry and New Withholding and Reporting Regimes

The Argentine Tax Authority (AFIP) issued General Resolution No. 5333, published in the Official Gazette on March 14, 2023. This Resolution implements the Tax Registry of Mining Activities, which includes three sections: Mining Companies, Suppliers of Mining Companies, and Holders of Exploration or Exploration Permits. The Resolution also establishes withholding regimes for Value Added Tax and Income Tax, and a reporting regime for the mining sector.

The most relevant points of the Resolution are:

1. Tax Registry of Mining Activities

Subjects. The following must register before the Registry, in one or more sections (as appropriate):

1. Those engaged in mining activities comprised in the Mining Code and/or in the Law No. 24196 (prospecting, exploration, exploitation, development, preparation, and extraction of mineral substances). Companies engaged in activities related to liquid and gaseous hydrocarbons are excluded.
2. Suppliers of mining companies.

 

3. Service supply companies registered before the Registry of Beneficiaries in Law No. 24196 as service providers for mining producers.

 

4. Mining producers providing services to third parties using capital goods for their own mining activities.

 

5. Suppliers of companies providing project management services for the mining sector.

 

6. Holders of exclusive exploring or prospecting permits for a specific area. These permitted must have been granted by the mining authority.

Those registered before the Fiscal Registry of Mining Companies established in AFIP’s General Resolution No. 3692 will be automatically included in the Mining Companies section of the Registry.

Registration requirements and procedure.

The registration procedure must be completed through AFIP's website. Such procedure varies depending on the type of taxpayer. Once complied with, the system will issue a registration certificate.

Subjects must apply before May 10, 2023. If the obligation to register arises after that date, the application must be filed before 15 calendar days as of the day the obligation started.

Use of benefits. Registering before the Registry is necessary to apply for the benefits established in Law No. 24196, as amended.

Likewise, registering is required to request the VAT returns related to the special regime for exporters, and for the tax credits returns from imports and acquisitions related to mining exploration.

2. Withholding regimes

The Resolution creates the VAT and Income Tax withholding regimes applicable to operations carried out by mining companies and their suppliers, and by those providing project management services for the mining sector (in the phase of "in situ" treatment of ore, auxiliary services, complementary studies, plant construction, engineering, modular units, turnkey plants, control system, etc.).

The regimes will be effective for payments made as of May 16, 2023.

1. VAT withholding regime

Withholding agents. Mining companies that are VAT registered taxpayers, and companies providing project management services for the mining sector must act as withholding agents.

Taxpayers subject to withholding. The Resolution establishes as subjects those suppliers of mining companies and suppliers of companies providing project management services for the mining sector.

Tax rates. These tax rates will apply for transactions subject to the general rate and will be halved for transactions subject to the 10.5% rate:

1. Sales transactions of subjects registered in the VAT and included in the Register under the section Suppliers of Mining Companies: 10.5%.

 

2. Sales transactions of taxpayers not included in the Register under the section Suppliers of Mining Companies, and of taxpayers who do not prove their status regarding the tax or are excluded from the Simplified Regime for Small Taxpayers: 21%.

Transactions subject to this regime are excluded from the withholding established in article 1 of General Resolution No. 2854, as amended, and from any other special withholding regime.

2. Income Tax withholding regimes

Withholding agents and taxpayers subject to withholding. The subjects are the same as those in the VAT withholding regime.

Tax rates. Applicable rates:

a) The rates applicable to taxpayers registered in the Income Tax and before the Registry, and to those under the Suppliers of Mining Companies section are those of the general withholding regime established in AFIP’s General Resolution No. 830.

b) The applicable rates for taxpayers registered in the Income Tax but not registered before the Registry under the Suppliers of Mining Companies section are:

 

• • Disposing of movable goods and exchange goods, and/or leases for works and or services rendered in a nondependent relationship and/or leases for movable goods and/or real estate: 20%.

 

• • Other operations: 30%.

 

c) Taxpayers not registered in Income Tax and subjects excluded from the Simplified Regime for Small Taxpayers 35%.

On the other hand, the Resolution established an Income Tax withholding regime for payments made by the parties in acquiring exploration or exploration rights from their owners:

a) The applicable rates for taxpayers registered in the Income Tax and in the Registry under the  Holders of Exploration or Surveying Rights section who have been in such section for over 6 months are those for the general withholding regime in AFIP’s General Resolution No. 830.

b) the applicable rate for taxpayers registered in the income tax but not registered in the Registry, or those who have been in such section for less than 6 months is 20%.

c) The tax rate for taxpayers not registered in the Income Tax and for subjects excluded from the Simplified Regime for Small Taxpayers is 35%.

Transactions subject to these Income Tax withholding regimes are excluded from the withholding established by General Resolutions No. 830 and No. 2616, as amended.

 

3. Reporting regime

The Resolution also established a reporting regime with which holders of exploration or prospecting rights granted by the mining authorities must comply.

The reporting parties must provide information regarding permits such as location, transfers, etc. through AFIP's web page on a semi-annual basis. The first submission must be made within 30 days as of the date of incorporation to the Registry.

The information corresponding to the first filing must be submitted up until August 31, 2023, and that corresponding to the first semester of 2023, up until September 30, 2023.

Subjects not complying with this requirement will be classified under a category that involves a higher risk of being audited, according to the Risk Profile System.

The provisions in the Resolution will enter into force on April 3, 2023.