Withholding of Taxes on Electronic Payments Eliminated

Article 102 of Law 27743 on Tax Measures provided that:

• entities administering debit, credit, purchase, and similar cards; aggregators; and other processors of electronic means of payment, for payments made through the systems they administer, process, or operate,
• financial institutions, for payments made as settlements corresponding to payments made through the systems they administer, process, or operate,
• financial institutions, for the payments they make as settlements corresponding to payments made through the systems administered, processed, or operated by the above

may only withhold taxes when the Argentine Tax Authority (AFIP) provides so. This applies as long as the amounts they process are more than 10,000 Acquisitive Value Units per month per taxpayer.

This modification seeks to boost the use of digital means of payment, freeing up working capital, promoting the formalization of transactions, and reducing the financial burden for merchants.

In line with this regulation, on August 20, 2024, the Ministry of Economy issued Resolution 780/2024 and instructed the Argentine Tax Authority to repeal the withholding regimes for value added tax (VAT) and income tax on electronic payments on payments made on or after September 1, 2024.

Accordingly, by means of General Resolution 5554/2024, AFIP repealed the following general resolutions, and their amendments and complementary resolutions:

• General Resolution AFIP 140/98 (as amended): this resolution had established a VAT withholding regime applicable to traders, lessors, or service providers who—as registered taxpayers—adhered to payment systems with credit and/or purchase cards. The withholding rates ranged from 1% to 6% and the entities that made the payments of the settlement of transactions carried out by users of the system had to act as withholding agents. The withholding had the nature of a paid tax, computable in the tax return for the tax period in which it was withheld.

• General Resolution AFIP 4011/2017 (as amended): this resolution had established an income tax withholding regime applicable to payments made to merchants, lessors, or service providers adhered to payment systems through credit, purchase, and/or debit cards, like that provided for in RG 140/98. The withholding rates varied from 0.5% to 2%.

• General Resolution AFIP 4622/2019 (as amended): this resolution had extended the scope of the withholding regimes as a result of technological advances that impacted and incorporated new ways of making payments. In this regard, VAT and income tax withholding regimes were established for parties administering 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, applicable to the settlements made to merchants, lessors, or service providers for the use of such payment systems. The applicable rates ranged from 0.50% to 3% in the case of VAT, applying a rate of 10.5% for nonregistered taxpayers. The income tax withholding rates ranged from 0.50% to 2%.

General Resolution 5554/2024 was published in the Official Gazette on August 21, 2024, and applies to payments made on or after September 1, 2024.