Argentina has developed one of the most complex tax systems for the collection and remittance of taxes on the transactions carried out by the non-resident digital service providers. Overseas vendors of digital services, in most cases, aren’t mandated to register for VAT on their B2C supplies.
Alongside the specific VAT collection procedure for the cross-border sales of digital services, the Argentinian tax system has introduced a provincial Gross Income Tax on sales by non-resident providers of digital services. One of the complexities that arises from this regime is that the Gross Income Tax isn’t a federal tax, but a provincial or city tax, which is part of the tax system introduced on the local level.
Gross Income Tax
What is Gross Income Tax?
The Gross Income Tax is a type of income tax imposed on the supplies of digital services provided by non-resident digital providers. The Federal Tax Code permitted local authorities to enact this type of tax, which is applicable exclusively in cases when such a transaction is deemed to be carried out in their territory.
When the place of supply of the digital services is in Buenos Aires, Buenos Aires Province, Córdoba, La Pampa, Río Negro, Salta, Santa Fe, Chaco, Neuquén, or Tierra del Fuego, and the customer is a natural person. It pays for the underlying transaction to a non-resident digital service provider, the applicable gross income tax shall be applied.
Gross Income Tax rates vary by province. This type of income tax(direct tax) is imposed on the net value of the transaction(VAT is excluded for calculation purposes). The buyer of the service is obligated to pay the tax at the provincial tax rate.
Payment service providers (financial institutions, credit/debit card issuers, and digital wallets) are the responsible entities for the proper collection and remittance of tax to the correct tax authorities.
The last province that mandated the obligation for payment service providers to collect and remit Gross Income Tax was the province of Santa Fe. In effect from July 1, 2025, customers of non-resident providers of digital services are obliged to pay for Gross Income Tax on the taxable value of the supply in the range of 3% to 4.5%, depending on the type of digital service.
The Argentine Tax Authority (AFIP) maintains a list of digital service providers that fall within the scope of VAT and Gross Income Tax collection, which local authorities are responsible for carrying out. When it comes to the Gross Income Tax, the situation differs slightly from VAT.
The VAT rate imposed on the supplies of digital services is uniform across the country, whereas the Gross Income Tax is a provincial tax with varying rates. The latest modifications to the Tax Code, regarding the collection of VAT by payment facilitators, have reduced their responsibility. As of this year, part of the responsibility for VAT collection and settlement has been shifted to local customers, not just to the withholding payment institution.
The Gross Income tax situation is different. Payment service providers are responsible for collecting and settling this tax.
Takeaway
Considering that the primary responsibility for collecting and settling Gross Income tax is shared between local payment service providers and customers (who pay for the service), non-resident digital service providers must be aware of this provincial tax.
Author: Aleksandar Delic
The awareness of this tax’s existence should be primarily viewed from a business perspective, as it influences the total price that the end customer will pay. The rates vary significantly between provinces, meaning that for the same service, a customer in Buenos Aires will pay a different price than a customer in Santa Fe.
Indirect Tax Manager – E-commerce
The Gross Income Tax is a provincial tax applied to non-resident digital service providers, imposed based on the net value of the transaction, excluding VAT.
Provinces such as Buenos Aires, Córdoba, La Pampa, Salta, and Santa Fe impose the Gross Income Tax on digital services supplied to local customers.
Payment service providers, such as financial institutions and digital wallets, are responsible for collecting and remitting the Gross Income Tax to local authorities.
VAT has a uniform rate across Argentina, while the Gross Income Tax is a provincial tax with varying rates depending on the region.
The Gross Income Tax in Santa Fe will apply from July 1, 2025, with rates ranging from 3% to 4.5%, depending on the type of digital service.
Gross Income Tax rates differ by province, meaning customers in Buenos Aires may pay a different tax rate than those in Santa Fe or other provinces.