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Through resolution No 3,577, the Argentine tax authority (AFIP) has introduced a 0.5 percent withholding tax on exports in "triangular operations" made on or after January 7, 2014. An additional withholding tax of 1.5 percent will be applicable for exports to low-tax jurisdictions.
The tax will be imposed solely for transactions where the country of physical destination is different from the country shown in the invoice. In other words, the tax will apply only if there is an intermediary that is not the final recipient. AFIP's objective is to deter certain transfer pricing practices where a fictitious intermediary buys the goods for a low price, and then resells them for a higher price. The only way to avoid the withholding tax is to make sure the goods are actually shipped to the country wherein the intermediary is established.
The withholding tax will normally be collected from the exporter as the goods are processed by the Argentine customs authority. It should merely serve as an advance corporation tax payment, which creates a cash flow disadvantage for the Argentine taxpayer. Given that Argentina generally has double-digit inflation rates, one would expect the tax to be quite punitive.
It should be noted that only "definitive exports for consumption" are covered. Special regimes, such as temporary admission, therefore remain excluded.
This new mechanism is expected to reduce the risk of tax evasion and improve tax collection, despite being unconventional by international standards. This tax is without prejudice to AFIP's ability to adjust prices under general transfer pricing legislation.
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