COVID – 19 - Special Compensation Regime for dairy products

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Special Compensation Regime for dairy products

Decree No. 418/2020 of the National Food Emergency, published on April 30, 2020, establishes a Special Compensation Regime for those who make sales of essential goods, such as certain dairy products listed in sections 558 to 560, 562, 564 and 567 of the Argentine Food Code or of dairy products that, in the future, are determined by the Secretariat of Domestic Trade (SCI, in its Spanish acronym) of the Ministry of Productive Development, in order to achieve and maintain stability of the prices of these products. The amount of compensation shall be determined based on their sales concluded as of January 1, 2020, inclusive, and as follows:

a. For sales of dairy products that are subject to Value Added Tax (VAT), the amount of special compensation shall be equivalent to the percentage (determined by the Ministry of Productive Development) of the amount of the tax credit that is computable for the seller, in the terms of section 12 of the Value Added Tax Law, amended text in 1997 and its modifications (VAT Law), for the acquisitions of dairy products that have been destined for those same sales.

b. For sales of dairy products that are exempt from VAT, it shall be equivalent to the VAT that has been invoiced to the beneficiary of this compensation for the purchases of dairy products that have been destined for those same sales. In this case, the amount of compensation may not exceed the amount that arises from applying the aliquot provided in the first paragraph of section 28 of the VAT Law, to the net price of sales exempt from VAT, each month, determined in accordance with section 10 of said law.

This regime shall only be applicable to the sale of the food indicated above to the extent that the buyer were one of the subjects mentioned in the exemption of subsection f) of section 7º of the VAT Law, provided that the buyer is a registered VAT payer and develops as main activity any of the following economic activities of the "Classifier of Economic Activities (CLAE, in its Spanish acronym)", approved by General Resolution (Argentine Tax Authority) No. 3537 dated October 30, 2013, or one that replaces it in the future:

 

Details of activity

CLAE

Hypermarkets retail sale

471110

Supermarkets retail sale

471120

Mini-markets retail sale (it includes small markets, self-service markets and similar establishments that sell meats, vegetables, and other food products jointly)

471130

 

Dairy products retail sale

472111

 

The terms, forms and conditions for the subjects reached by this regime to show proof of those sales and acquisitions of dairy products included in the regime, shall be established by the SCI. Likewise, the Federal Administration of Public Revenue (AFIP) may provide the SCI with information on sales and aliquots for calculating the amount of compensation, so that the SCI can make the corresponding calculation in the framework of the procedures initiated by the beneficiaries. For these purposes, the AFIP shall establish the additional information that the beneficiaries shall provide when preparing their VAT affidavit, along with any other information or complementary documentation that may be necessary.

In turn, the Head of the Cabinet of Ministers shall have the power to enable the necessary budget item to establish the Regime and it shall be the Ministry of Productive Development who shall determine the way in which the amounts corresponding to the compensation derived from the Regime shall be accredited to the beneficiaries.

This Regime shall come into effect as of May 1, 2020 and shall be applicable in relation to sales that are concluded until June 30, 2020.