• Argentina

Argentina starts to tax digital services supplied by non-residents

Argentina is the latest tax jurisdiction to announce a set of taxation measures that include reform to how digital service supplies from non-residents are to be taxed.

Jan 31, 2018

The new Argentine government has wasted no time in announcing a set of taxation measures, that include significant reform to how digital service supplies from non-residents are taxed.

Argentina digital services tax

On Tuesday, October 31, it was revealed that non-residents supplying digital services (such as streaming and music downloads) will be subject to a 21% from a provisional start date of February 1, 2018.

According to local news reports the Federal Public Revenue Administration (AFIP) in Argentina will start charging taxes through credit cards to digital service platforms. Affected platforms will include the likes of Netflix, Spotify, and Airbnb.

Regular readers of this blog will be familiar with this development, mirroring as it does international developments around the taxation of digital services supplies from non-resident companies.

Update, January 16, 2018: There is a slight difference to the Argentine rules that were originally announced. The draft law was written in early December and is due to be approved on December 29 with a go-live date of February 1.

One important point to note is that the obligation is not with foreign suppliers of digital services. We will bring you more information as we get it from Argentina.

South American developments

This news forms part of wider recent regional taxation developments. Colombia and Uruguay have also recently looked at the taxation of non-resident supplied digital services.

In the case of Colombia, from January 1, 2018, Business-to-Consumer (B2C) supplies from a non-resident company to a Colombian resident will mean that credit and debit card issuers and other payment processors will have to withhold Colombian VAT before payment is made from the resident to the supplier. The VAT rate is 19%.

Meanwhile, Uruguay has also joined the conversation around taxing digital services. A report in early October 2015 in El Observador outlined how the National Association of Uruguayan Broadcasters (Andebu) had raised the issue of an unfair marketplace when competing with the likes of international streaming players such as Netflix and Spotify.

The Directorate General of Taxation (DGI) in Uruguay is assessing the possibility of a VAT that could raise an estimated $2m per year from Netflix alone. We are awaiting developments in Uruguay to confirm dates.

Taxamo content is created for guidance only, please consult your local tax advisor.