Argentine Senate Approves VAT Hike On Electronics

by Mike Godfrey, Tax-News.com, Washington

26 October 2009

Argentina's upper chamber of parliament, the Senate, has approved a value-added tax increase on electronic and electrical goods from 10.5% to 21%. The measures are designed to support products from the Tierra del Fuego special economic zone, which is specifically exempted from the VAT.

The tax will fall mainly on imported goods, and importers claim this will force price rises of 30-36%, as internal tax exemptions of 26% are being removed at the same time.

The Argentine Association for Manufacturing Electronic Terminals (Afarte), which represents companies from Tierra del Fuego, defended the tax meaures as a boost to Argentina's industry.

Afarte said the changes would bring 1,200 new jobs directly, and a further 4,000 indirectly.

The list of products subjected to the so-called 'technology tax' includes: cellular phones, portable computers, monitors, televisions, GPS devices, digital cameras, video recorders, MP3 players, and microwaves, but air-conditioners and notebooks were removed earlier in negotiations.

World Trade Organization rules allow value-added tax on imported goods but bar discrimination between imported and domestic products.

If Argentina imposes value-added taxes which are deemed to be discriminatory, such action could be challenged by other WTO members, and scrutinized by a WTO dispute resolution panel.

A recent WTO report showed that Argentina had initiated 19 anti-dumping investigations in the January-July 2009 period, the highest number among the G-20 nations.

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