Loan Intermediary Services: Argentina

Abstract

Until 1990, Argentina only taxed the supply of services that were exhaustively listed in the VAT Law; financial supplies were then beyond the reach of VAT. In September 1990, the Argentine Congress introduced a far-reaching amendment that extended the VAT scope to all supplies of services. Loan intermediary services are the most significant type of service within the financial supply category, and they are undoubtedly taxed with VAT as any other service supply in Argentina. For the specific case of financial supplies the VAT Law mandates that the time of supply is deemed to occur either at the expiration of the period in which the financial output must be paid, or at the date in which this output is fully or partially received, whichever occurs first. Loan intermediary services are subject to VAT if and when they are carried out in Argentina. Additionally, based on the destination principle generally adopted by the VAT Law, loan intermediary services received from abroad are also taxable when they are used or enjoyed in Argentina, and the recipient (borrower) is a registered VAT payer. The taxable amount is the gross interest received by a financial institution as consideration for the service provided. The standard VAT rate in Argentina stands currently at 21%. However, in the case of certain loan intermediary services a reduced 10.5% rate applies. Apart from VAT, in Argentina there is a separate and distinct indirect tax on gross turnover that is imposed by the provinces, with similar characteristics across provincial jurisdictions.