International Telecommunications Services
In a recent judgment[1], the Tax Court of Appeals of the Province of Buenos Aires considered that the international telecommunications service denominated as “incoming traffic”, which consists in routing telecommunications originated abroad and delivering them to recipients in Argentina, is not subject to gross income tax in such province.
In order to make such decision, the Court followed Section 160 of the Tax Code, which sets forth that, among others, the following activities do not constitute taxable actions: “d) exports, meaning the activity of selling products and goods outside of Argentina by the exporter, subject to the mechanisms applied by the National Customs Administration. The provisions of this subsection do not reach related activities such as: transport, slinging, stowage, deposit and any other similar activities”.
Then, the Court resorted to the Customs Code, which defines the concept of export of goods in Sections 9 and 10. Section 9 outlines that the “export is the extraction of goods from a customs territory”, and Section 10 sets forth that “there will be also considered as goods: a) the provision of services made abroad, which is used or exploited outside of the country …”
Considering that from an economic standpoint the services of “incoming traffic” are exploited and used in a foreign country and by a person that resides or is located abroad, the Court concluded that it is an export activity developed by the Argentine company, and therefore included in Section 160 subsection d) of the Tax Code as an activity not subject to Gross Income Tax.
Contact: Gastón Miani gaston.miani@trsym.com (+5411) 5272 1759
[1] Tax Court of Appeals of the Province of Buenos Aires, file Nº 2306-114999/2004, “IMPSAT S.A.”, from September 25, 2014.