Importers of consumer goods (merchandise) – Exclusion from the VAT Collection Regime before the DGA

As a starting point, it will be necessary to highlight that the system of perceptions applicable to the definitive importation of goods is regulated by the AFIP RG 2937[1]. As regards the relevance of this report, the following elements should be noted:

1. The reference standard will apply to all definitive imports of movable goods. The collecting agent will be the AFIP-DGA;

2. Moment of application of the regime: definitive importation of movable property taxed by value added tax (Art. 1);

3. The rule contemplates exclusions in its Art. 2, which are generally as follows:

• Goods for personal use of the importer;
• Goods for personal use of the importer;
• Used goods for local importer;
• Used goods for local importer;
• Introduction through border customs and under a simplified regime;
• Supplies for boat repair and similar items.

From the above it should be noted that any import of movable property, definitive, and with the character of exchange good for the importer, except for cases specifically mentioned in Art. 2 RG 2937, will be subject to the reference tax collection.

4. Subjects liable to collection: importers;

5. Tax base: according to Art. 25 Law 23.349[1] according to Art. 7 RG 2939;

6. Applicable rates. According to the following details:

• Assets subject to the general tax rate (21%) (registered taxpayers): the 20% collection rate will be applied to the taxable base indicated in (5) above;
• Assets subject to reduced rates (registered taxpayers): the 10% collection rate will be applied to the tax base indicated in (5) above;

It is important to highlight the financial effect of the perception indicated here given that it is “accumulated” to the VAT linked to the definitive import of goods, the latter corresponding to the character of fiscal credit. Thus, in the case of a definitive import of goods subject to the general rate of the tax, the impact on the value added tax will be the following:

1. VAT import tax credit: 21%;
2. VAT perception RG 2937: 20% (commonly known as “additional VAT”.

Although Art. 8 RG 2937 is responsible for clarifying that "the amount of the perceptions made will have the character of tax paid for the registered responsible parties, corresponding to be computed by them in the sworn declaration of the fiscal period to which the tax credits generated by the definitive import operations that gave rise to the perception are attributable" the reality is that the importer must consider the financial fixed assets (in case of not having tax debits or compensable tax debt that allows the application of said balances[1].

Exclusion from the perceptions regime

Art. 8, last paragraph, RG 2937 establishes that if balances arise in favor of the taxpayer on a recurring basis, the procedure regulated by RG AFIP 2226 may be used.[1] for the purposes of requesting a certificate of exclusion from the VAT withholding and collection regime. As far as it is of interest to know, the salient elements of the AFIP RG 2226 are described:

1. This is a general regime for processing exclusions from the VAT withholding and collection regime. It applies to importers subject to the regime of RG 2937, except for excluded subjects indicated in Art. 3 RG 2226, for which, as far as it is important, we indicate the hypotheses under which the requesting taxpayer could be excluded from the regime:

• They have been sued or criminally reported, based on Laws No. 23.771 or No. 24.769 and their respective amendments, as applicable, in respect of which the corresponding fiscal request for referral to trial has been formulated;
• They have been reported or criminally prosecuted for common crimes that are related to the non-compliance with their tax obligations or those of third parties, in respect of which the corresponding fiscal request for referral to trial has been formulated, or when said request is related to common crimes that were the subject of criminal proceedings in which the prosecution of state officials or former officials has been ordered;
• These are legal entities whose owners - directors or agents -, as a result of the exercise of their functions, are involved in any of the situations provided for in paragraphs a) and b) above;
• It has been established to them - as a result of verifications and inspections carried out, including through the use of computer systems - that the exclusion benefit previously granted or that they are currently enjoying is inadmissible;
• Are disqualified from submitting an application, in accordance with the provisions of Articles 25 to 30 hereof (effects of rectifications in favor of the tax authority and differences in form F939);
• They are required to issue class “M” or class “A” receipts with the legend “Obligation Subject to Withholding”;
• Submit the application more than THIRTY (30) calendar days before the end of the validity of a previously granted certificate;
• At the date of the application, they have another submission in process or, once it has been resolved, they register disagreement or an appeal pending resolution;
• Join the unreliable contributor base.

2. Requirements for filing the tax benefit (Art. 4 RG 2226).

• They are considered to be registered taxpayers for value added tax;
• Keeping up-to-date information regarding the economic activity(ies) being carried out, in accordance with the provisions of General Resolution No. 485;
• Have the declared tax domicile updated, in the terms established by General Resolution No. 2109, or the one that replaces and/or complements it;
• Having complied with the obligation to submit the value added tax returns corresponding to the last TWELVE (12) fiscal periods, or those that must be submitted since the beginning of the activity, expired prior to the date of application;
• Having complied with the obligation to submit the last TWELVE (12) sworn declarations of social security resources, or those that must be submitted since the beginning of the activity, expired prior to the date of application;
• Having complied with the obligation to submit the latest sworn declaration of income tax, presumed minimum profit tax, and personal property tax, as applicable, due on the date of the application;
• Not registering liquid and payable debt with this Federal Administration on the date of the request, for the obligations detailed in sections d) and f) above;
• Have a freely available balance, arising from the last VAT declaration due on the date of application. Said balance must be equivalent to at least TWENTY PERCENT (20%) of the average tax determined in the declarations mentioned in section d) of this article, with the exception of those taxpayers whose operations are taxed with a reduced rate, to whom different control guidelines will be applied in order to verify the indicated condition;
• Having complied, where applicable, with the obligation to submit the sworn declaration of the information regime established by General Resolution No. 3.293 and its complement, for the last fiscal period expired on the date of submission of the application.

Special rules for importers

RG 2226 establishes a special condition applicable only to importers who do not comply with the requirement indicated in Art. 4, inc. h) RG 2226 (free availability balance greater than the average of the technical balance accrued in the last 12 months and in amounts of 20%). In this case, the importer may request the benefit even without complying with excess balances in favor if the following situations occur (certificate enforceable only before customs). The conditions (for the exceptional qualification referred to) are:

• Having complied with the rest of the requirements established in the preceding paragraph;
• Be registered and authorized as an importer/exporter in the 'Special Customs Registries' provided for in Title II of General Resolution No. 2.570, its amendments and supplements, with an age equal to or greater than ONE (1) year and not register suspensions in the same, greater than THIRTY-ONE (31) calendar days, considered individually, in the last TWELVE (12) months;
• Having made official in the last TWELVE (12) months prior to the application, at least TWELVE (12) import dispatches with merchandise delivered to the market (Cancelled Status), for an amount of FOB value equal to or greater than THREE HUNDRED THOUSAND UNITED STATES DOLLARS (US$ 300.000) or its equivalent in other currencies at the exchange rate considered in the officialization;
• Be registered as an employer, having declared TWO (2) employees, as a minimum.

Conclusions

It is common to confuse the effects of the general certificate RG 2226 AFIP with those expected for the specific procedure in the case of importers. Having the certificate of exclusion from the VAT withholding and collection regime is in many cases not an option for the taxpayer but a necessity.

In view of the confusion detected, we understand that it is prudent to clarify that the RG 2226 certificate may be of a general nature or of a specific nature and may only be enforceable before the DGA.

The general certificate will be certified before any collection agent (including the DGA). The individual certificate will only be enforceable before the DGA.

The standard establishes special conditions that the importer must prove. Only when you wish to obtain the reference certificate and have not managed to accumulate freely available balances in amounts greater than the average of 20% of the technical balances accrued during the previous 12 months..

The above means that, if the requirement of freely available balances is met (Art. 4 inc h) RG 2226), the requesting importer will not be required to comply with the requirements a.- to d.- indicated in the previous point.

Finally, it should be noted that the exclusive certificate for importers considers a partial exclusion (50%) while the general certificate enables a total exclusion (100%). Validity in both cases: 6 months.

The request for any of the two certificates referred to (general or particular) will be made from the digital systems specifically enabled by the tax authority. Before making the request, it is recommended to verify the requirements established by the regulation under discussion in order to verify compliance with each of them.[1]. Once any situation required by the tax regulations has been regularised and the tax benefit of temporary exclusion from VAT withholding and collection regimes has been requested, you should consider that you will surely receive a request for data to verify the general situation of the taxpayer. This is perfectly normal given that the tax authority

It will be aimed at verifying the reason why the technical balances that enable the order have not been consumed, as well as the source of financing for the operations.

In reference to the latter, the applicant, in addition to verifying full compliance with the guidelines of RG 2226 for obtaining the reference certificate, must verify, at a minimum, the following:

1. supporting documentation (opposability to third parties) regarding the method of financing current operations;
2. business reason that made it impossible to generate tax debits in amounts greater than current tax credits;
3. source of funds that finance the activities;
4. corporate undercapitalization hypothesis.

Taxpayers should remember that they are requesting a tax benefit and, in this regard, the tax authority will conduct a detailed scrutiny of the activities carried out and their financing.

Sergio Carbone is a Public Accountant (UBA)

1. BO 15-11-2010

2. Law 23.349: “ARTICLE 25 — In the case of definitive imports, the rate will be applied to the normal price defined for the application of import duties to which all taxes on the import will be added, or due to it.”

3. Tax collections, once entered into the tax assessment to which they are attributable, are converted, if they exceed the technical balance of the period in favor of the tax authority, into freely available tax credits and may, among other applications, be used to offset tax debts (obligations included in Law 11.683 and as a taxpayer). Art. 8 RG 2937 – Art. 24 Law 23.349.

4. BO 20-03-2007

5. A very bad practice is to limit the task to requesting the certificate through the web platform and then, if there are omissions (something almost always comes up), you receive a rejection and block the next attempt until a new month.