The Value Added Tax is, by way of summary, a tax burden on consumption. In this brief guide on VAT we tell you how to calculate it, what are the rates that apply in our country and why it is so important for businesses.
In Argentina there are 3 VAT rates, known as aliquots: 21% is the general rate, the most common; 10.5% is for some capital and essential goods; and 27%, which applies to certain activities, such as electricity and telecommunications.
If you have a business (online or physical) or are considering creating one, knowing how VAT works is key to maintaining neatness in .
Also keep in mind that having the services of an accounting professional, in addition to helping you to speed up this process, will guarantee the accuracy of the calculations, an essential aspect to avoid problems with the Treasury.
What is VAT?
The Value Added Tax (VAT) is a tax burden on consumption, this means that it is a tax paid by the buyer.
For final consumers, VAT is included in the price of the products they purchase and the services they hire.
For their part, the people affected by the tax, the registered managers, are obliged to discriminate VAT at the time of the sale of their products or services. Next, they have to declare said amount before the AFIP and pay the tax.
How much is VAT in Argentina?
There are 3 VAT rates in Argentina, known as aliquots: 21%, which is the general rate, the most common; 10.5%, which is for some capital goods and basic necessities such as fruits, legumes, vegetables, meat, public transportation, medical services, among others; and 27% that applies to certain activities, such as electricity and telecommunications.
How to calculate VAT?
If you are wondering how VAT is calculated, keep in mind that the VAT return and payment is made on a monthly basis and is calculated, in general and synthetic terms, as follows:
Tax to pay = Tax debit – Tax credit – Withholdings and perceptions
If you want to learn how to do it in an Excel spreadsheet with a simple formula, we invite you to read .
How is the tax debit calculated?
The tax debit is calculated based on sales, whether from sales made to final consumers, such as invoices A made to registered or monotax payers.
The amount of the tax debit included or not in the invoice can be obtained as follows:
Tax Debit Amount = Total Billed Amount – (Total Billed Amount / 1.21)
In the example, the general tax rate of 21% was used. If the need arises from the activity carried out to apply the reduced rate of 10.5% or the increased rate of 27%, the denominator must be considered to be 1.105 or 1.27, respectively.
How is the tax credit calculated?
The tax credit is calculated based on purchases made from registered managers and it is necessary to demand a . It can be obtained as follows:
Tax Credit Amount = Total Amount Billed – (Total Amount Billed / 1.21)
The general tax rate of 21% was also used in this example. As in the previous case, if the need to apply the reduced rate of 10.5% or increased rate of 27% arises from the activity carried out by the supplier, the denominator must be considered to be 1.105 or 1.27, respectively.
At all times it will be necessary to consider that the amount of the computable fiscal credit for the purposes of the VAT settlement must correspond to the exercise of activities taxed by said tax.
Otherwise, it should be considered computable proportionally, in accordance with the provisions of articles 12 and 13 of the , the amending and complementary regulations.
As a registered person in charge, you have the possibility to ask your supplier to issue you an A invoice with discriminated VAT. You will be able to take that amount as a credit and subtract it from the total VAT to be paid in that same month.
For example, if OCA made you an invoice A of $121, according to our formula for calculating VAT you would have $21 to use as a credit, so your true expense was $100.
Let’s look at another example: if Mercado Pago issues you an A invoice, the price you are paying includes 21% VAT, which you can then deduct from what you pay at the end of the month for sales.
In short, you are paying for the difference between what you charged and what you paid. It is precisely called “Value Added Tax” because you pay on the added value that you give to the product.
Perceptions can be suffered more than anything in purchases and appear discriminated in the invoices that they issue us.
The withholdings suffered originate from charges made for the sale of goods or the provision of services (in fact, it translates as a lower charge) and are documented in withholding certificates.
Both the withholdings and the perceptions are amounts that the withholding and collection agents deposit to the AFIP by normative regulation and that, later, it is possible to deduct in the liquidation.
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How to know the VAT condition of a CUIT?
To know the condition of a CUIT (Unique Tax Identification Key) against VAT you have to follow these steps:
- Login to .
- Complete the “Taxpayer CUIT” and “Security Code” fields.
- By clicking on “Consult”, a new screen will appear with the “Proof of Registration” corresponding to the CUIT you entered, where you will be able to check the condition against VAT and other taxes.
How to prepare the VAT affidavit?
According to , the 9 steps to prepare the VAT affidavit are the following:
- Enter the “My Web Applications” service and select “New”. Next, complete the details of the Agency (AFIP), Form (F.2002 – VAT PER ACTIVITY) and Fiscal Period (period to be declared).
- Indicate if you carry out any of the activities that are excluded from the online form. Otherwise, check the box that appears at the end: “Declare not to have carried out operations mentioned in point V in the period”.
- Charge the tax debit and credit and make the settlement. Keep in mind that the system allows you to verify, record, preview and present the affidavit.
- When selecting “Fiscal Debit” to see the registered activities, press the “+” sign. If you mark the option of sale to exempt or final consumers, the amount of sales to enter is the total sales and not the taxed net. The burden of sales and tax debits must be reported by activity.
- When selecting “Tax Credit” if, for example, you made the purchase of personal property, enter the tax credit and inform for each aliquot the net tax that originates the tax credit. At the end of the load, I return to the original screen.
- In the settlement section, you will see the totals charged for both the debit and the tax credit. Likewise, other data upload options are enabled regarding: technical balance in favor of the previous month, withholdings, payment schemes on account, among others. And in the end the balance in favor of the taxpayer or AFIP is determined.
- Then, you have to inform the free availability balance of the previous period. If you used it to offset any obligation or transferred it, enter the offset or transfer data through new screens.
- When accessing “My withholdings”, the system displays the information provided by the withholding agents. If there is no withholding suffered, you can enter through the “Add” button.
- Once all the data has been loaded, you can submit the affidavit using the “Submit” button that appears on the upper right edge.
💡 Extra tip: AFIP also makes available the “VAT ready” method to file the Value Added Tax affidavit. .
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What activities and products are exempt from paying VAT?
“Exempt VAT” refers to a subject that is free to pay the Value Added Tax for the type of good it sells or the service it provides, characterized by contributing to the common good of society.
Some examples of exempt products or services are:
- Books.
- Teaching for people with disabilities.
- Health care services.
- Cultural shows and amateur sports.
- Tickets for authorized and official raffle or betting games.
- Taxi and remis services whose route does not exceed 100 kilometers.
Access the full list.
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Conclusions
Now that you know what VAT is and how to calculate it, all you need to do is apply this knowledge to your business.
And if you still don’t sell online, we invite you to try Tiendanube, the platform to create your leading sales website in Latin America.
Y Show the world what you are capable of!
Keep in mind that this post does not have the nature of advice or recommendation to adopt a specific tax criterion, which should be consulted with tax advisors regarding all tax consequences to the extent deemed necessary.
In this sense, this guide does not constitute advice or professional service by Tiendanube on any particular matter. The company assumes no liability for any damages resulting from or in connection with the use of such information.
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