English translation of the original article in Spanish. If there is any discrepancy, the Spanish version prevails.
§ 1. Introduction
Among the tax collection and administration systems most widely used by provincial and municipal tax authorities in Argentina, the most widespread in recent years are those that allow them to obtain resources on a constant basis, at low cost and even before the taxable event has been perfected in the person of the taxpayer, that is, collection-at-source regimes.
Without in any way purporting to exhaust the subject, in this section we will attempt an approach to the core concepts underlying collection-at-source regimes: (i) what do they consist of?, (ii) what are they for?, (iii) the persons who must carry out the withholding or perception and those who bear it, and (iv) the object or source on which the withholding and/or perception will fall.
We do not intend to carry out a specific analysis of the collection regimes of all taxes; rather, we will take the central aspects of those provided for the turnover tax (impuesto sobre los ingresos brutos)2, whose conclusions are applicable to many municipal fees and other local taxes that provide for taxable events with similar descriptions.
In turn, it is worth clarifying that the tax codes and general resolutions of the local tax administrations use the term “collection agent” (agente de recaudación) to refer to persons who are required to make—in the economic transactions in which they take part—withholdings and/or perceptions, so we will use the term collection agents to refer to such persons interchangeably, unless otherwise specified in this paper.
§ 2. On collection-at-source regimes
2. 1. What are collection regimes?
Collection-at-source regimes are tools that allow the tax authority (Fisco) to secure the advance fulfillment of taxpayers' substantive obligation through perception or withholding at the source that generates or receives income.
Although the obligations imposed by these regimes, as we will see, are public burdens that should be established by law in both the formal and the material sense, the tax codes delegate their implementation to the tax administrations, which is carried out through the issuance of general resolutions by the provincial or municipal tax authorities, depending on the tax for which they are imposed3.
On this point, it has been argued4 that “(…) the obligations we are talking about go far beyond the character of a ‘public burden’. Under the label of duties of collaboration with the administration and in favor of the treasury, free of charge for the State and very onerous for those designated, they must place at the State's disposal additional administrative systems to determine, assess, pay and report the taxes of others. Any delay or omission will make them liable for compensatory interest and for civil and/or criminal liability actions”.
These general resolutions basically impose on certain persons—who are generally published in a list that is periodically updated, or who are notified of that obligation through the issuance of a specific resolution—the obligation to make withholdings or perceptions according to different criteria (type of activity, amount of the transaction, whether the person enters or leaves the jurisdiction, whether or not it holds a certain certificate, whether or not it has a domicile or tax registration in the jurisdiction, among others) and then to pay them over to the tax authority within a set period.
What withholding or perception seeks is to capture in advance a manifestation of ability to pay5 that is presumed to be later affected by the tax for which the collection regime is established in that jurisdiction.
In this regard, within the framework of the legal-tax relationship, it has been said6 that “(…) the usual practice is for payment to be made after the occurrence of the taxable event, and therefore after the substantive legal tax obligation arises. However, there are various figures in which payment is made before that obligation arises. This happens, for example, with tax advances, with other payments on account required in certain taxes and with amounts withheld or perceived”.
This advance payment will be credited on account of the tax ultimately due when the taxable event7 is perfected at the close of the tax's fiscal period, whether monthly or annual, so its link with the taxable event is indispensable.
In addition to being a revenue-raising and financial tool, collection regimes also stand as an important instrument of control and of obtaining information, by providing the tax administrations with data on the transactions carried out by the persons they cover, since they allow them to detect those persons who carry on activities in their jurisdiction without being duly registered for the tax, whom it would otherwise be very difficult to identify and whose ability to pay would otherwise be very difficult to capture8.
2. 2. Purpose of collection regimes
Having made a first approach to what collection regimes are, one may ask: What are they for? or What is their purpose?
The answer to these questions would seem to be simple: the main purpose of collection regimes, as their name indicates, is to collect and to facilitate and secure collection. Nevertheless, other purposes complementary to that of facilitating and securing, for the tax administrations, the collection of the taxes under their charge can validly be attributed to them.
As Fernández9 rightly points out, in developed countries withholding-at-source regimes, by allowing more automated control, are usually established in order to free up trained and specialized personnel for other tasks. This circumstance makes it possible to enlarge the teams devoted to auditing large international economic conglomerates, which extend their activity throughout the world and have large technical resources at their disposal to carry out international tax planning.
Along these lines, it has been pointed out that “(…) developments in the field of tax collection have led to an ever greater participation of private individuals in the collection of taxes, since the State has assessed the advisability of having a person other than the taxpayer assume the latter's obligations, as regards the payment of the tax into the public coffers, through ‘withholding at source’. This regime was implemented with respect to income taxes, but its application later became widespread, to the point that, in our country, there are almost no levies for which a withholding or perception regime has not been established. The advantages that withholding or perception at source has for the tax authority are clear: savings in collection costs, which are shifted to private individuals; the intervention of a third party who, being jointly and severally liable for payment of the tax, hinders any attempt to carry out unlawful schemes aimed at frustrating the tax claim; and the financial benefit resulting from collecting the tax before the general due date established for the respective levies10”.
However, efficiency in fiscal terms cannot be measured solely by the amount of revenue that a given collection regime provides to the Public Treasury; care must also be taken to ensure that only income that is subject to the tax being collected is collected and, in turn, that those designated as collection agents have a relationship of proximity or immediacy with the taxable event of the tax to be collected.
In other words, there must be a link or connection between collection regimes and the configuration or occurrence of the taxable event; otherwise, two inadmissible conclusions could be validated: (i) that collection-at-source regimes operate as an additional and unlawful means of financing for the local governments that establish them, since whoever suffers the perception or withholding on non-taxable income would be coercively deprived of it, that is, taxes would not be being collected; and (ii) that excessive and unreasonable public burdens are imposed—because of the shifting of administrative costs it entails—by requiring persons who have no immediate link with the taxable event or the jurisdiction in question to act as collection agents.
In light of the foregoing, and bearing in mind that collection regimes do nothing more than establish advance payments or prepayments in respect of a principal tax obligation, they must be established taking into account the characteristics of the taxable event of the tax that has not yet been perfected and against which they must be credited in the future.
That is why, beyond the fact that collection regimes may in practice serve as an important tool of control and of obtaining information, we can state that their purpose is to secure and collect exclusively manifestations of wealth immediately linked to the taxable event of the tax for which they are established.
2. 3. Persons subject to collection regimes
Now, at this point one may ask: on whom may the obligation to act as collection agents be imposed? and who may be covered by these regimes?
We can state with complete certainty that the tax-related obligations or duties arising from collection regimes are public burdens whose fulfillment is enforced by the State, and the persons required to fulfill these duties are commonly called “responsible parties” (responsables).
Accordingly, most legal scholars11 classify taxable persons as i) persons liable for their own debt; ii) persons liable for the debt of others; and iii) substitute responsible parties.
Persons liable for their own debt are taxpayers proper, that is, those persons who carry out the taxable event of the tax in question. Persons liable for the debt of others are substitute responsible parties and those who are required to comply on behalf of taxpayers.
Both in the case of substitute responsible parties and in the case of persons liable for the debt of others, we are dealing with persons who do not carry out the taxable event of the tax but who, because of their link with the taxpayer, are required by law to fulfill the tax obligation with their own assets.
What distinguishes substitute responsible parties from other persons liable for the debt of others is that substitutes answer for a tax debt in their own right12. In the remaining cases of liability for the debt of others, the liability will be joint and several and unlimited, but always for the debt of a third party.
In this sense, Casás13 teaches that “(…) it is possible to state that jointly and severally liable parties are persons outside the factual premise, but close to it, or linked to the principal taxable person by reason of their trade or activity, who, placed by the legislature alongside the taxpayer, formalize a legal bond in which both coexist, interchangeably, in the sphere of passive subjection vis-à-vis the tax authority”.
On this point, as an unavoidable reference, we note that Article 27 of the OEA/BID (Organization of American States / Inter-American Development Bank) Model Tax Code for Latin America14 defines tax responsible parties as “(…) persons who, without having the status of taxpayers, must, by express provision of law, fulfill the obligations attributed to the latter”.
Along these lines, Article 25 of the Model Tax Code prepared by the Inter-American Center of Tax Administrations15, insofar as relevant here, includes among tax obligors or tax responsible parties “(…) c) Withholding agents and those required to make payments on account.” and “d) Perception agents. (…)”.
The commentaries to the MCT CIAT—whose relevance is evident from the fact that this model code was prepared by representatives of various tax administrations of Ibero-America—explain that withholding agents16 are persons who take part in taxable acts or transactions, on whom the law imposes the duty to deduct from the payments they have to make a percentage thereof as the tax affecting the transaction, or as an amount on account of the tax that will ultimately be determined once the taxable event has been configured, being required to pay such taxes or amounts on account thereof to the tax authority.
For its part, Article 29 of the MCT CIAT defines perception agents as “(…) the person or entity on whom the law governing each tax, in view of its activity, function or contractual position, imposes the obligation to collect and pay to the Tax Administration the additional amount charged on the occasion of payments it receives from other tax obligors, as the tax or payment on account of the tax that will be due from them”.
As with withholding agents, perception agents are also linked to the occurrence of the taxable event but, unlike the former, the law imposes on the latter the duty to charge or add to the payments they are to receive or collect a percentage thereof as the tax affecting the transaction, or as an amount on account of the tax that will ultimately be determined once the taxable event has been configured, being required to pay such taxes or amounts on account thereof to the tax authority.
Some legal scholars17 have stated with respect to withholding and perception agents that “(…) both are taxable persons in the principal legal tax relationship for the debt of others. It cannot be said a priori whether they are ‘jointly and severally liable parties’ or ‘substitutes’. If the legislature creates them but leaves the ‘taxpayer’ alongside them, they will be ‘jointly and severally liable parties’. This is the general criterion prevailing in Argentine legislation. If the taxpayer does not accompany them in passive subjection, they will be ‘substitute’ responsible parties”.
As we can see, there is a general consensus that the obligations arising from collection regimes, established both for perception and for withholding agents, also called collection agents, are a public burden and, as such, must always arise from law, even though, in practice, such obligations are imposed through resolutions issued by the local tax authorities.
In turn, fulfillment of the obligations imposed on withholding and perception agents is coercively enforced since, in the event of non-compliance, collection agents answer with their own assets and may suffer penalties of a criminal nature18.
However, notwithstanding that the obligation to act as a collection agent may be coercively enforced, we consider that such obligation cannot be imposed arbitrarily because, as Soler rightly teaches, “(…) the institution of withholding or perception, therefore, requires certain conditions in order to turn a person into a party liable for the tax debt of another. Indeed, it is necessary that the tax authority be a creditor of the taxpayer and, in turn, that the latter be linked to the withholding or perception agent not only by reason of the material control of the sum of money held by the agent, but through its participation in a business that gives rise to the tax obligation of the taxpayer. In other words, for their designation as such to be proper, withholding and perception agents must have some legal link with the taxpayer that is in turn related to the birth of the legal tax relationship between that taxpayer and the State”19.
2. 4. Object of collection regimes
At this point in our discussion, we understand that, in order to analyze whether, in the application—to the specific case—of collection regimes, the identity between collection and the taxable event is verified, it is extremely important to determine the object on which these collection regimes will fall or be applied.
To that end, it is relevant to approach the concept of source, since only those manifestations of wealth that are immediately linked to the taxable event of the tax being collected, and that objectively allow us to discern whether the means chosen—applying a withholding or perception at the source that produces or receives income—is reasonable for achieving the proposed end, namely collecting taxes to the extent of the taxable event and no further, may be included within what is established as the “source”.
Now, one might ask: what should we understand by source? We consider that source should be understood as facts or acts of an economic nature that constitute an objective manifestation of wealth capable of being taxed by the Legislature through the imposition of taxes, because it constitutes a manifestation of ability to pay.
Likewise, it must be a manifestation of wealth directly or immediately linked to the taxable event of the tax for which the collection regime is established.
This is so because everything that forms part of the concept of source and on which the collection regime is applied must objectively be capable of being taxed by the tax on account of which collection is made; otherwise, it should be automatically discarded and excluded from the concept of source20.
In other words, it would be reasonable to require that collection regimes determine as their source the facts or acts revealing ability to pay that are immediately linked to the taxable event of the tax for which the regime is established.
Likewise, we can state that, since the taxable event has not yet been perfected at the time the withholding or perception is made, when it is established that an economic act or fact must be considered a “source” on which withholdings or perceptions will be applied, what is being done is nothing more and nothing less than establishing presumptions.
Presumptions in tax matters are facts or acts of an economic nature revealing a manifestation of ability to pay which—upon being externalized—show a high degree of probability that they will be reached by the taxable event of the tax in question. They constitute indications that the person who carries out those acts or facts very probably meets the proper condition to be called upon to bear public expenditure by possessing objective wealth taxed by the tax for which the presumption is established.
If this relationship of high probability between the fact chosen as a presumption and the expected conclusion is not respected, the result reached by applying the rule will lack reasonableness and may be disqualified as a valid conclusion in constitutional terms (cf. Articles 14, 28 and 33 of the National Constitution)21.
It must be borne in mind that presumptive techniques, by their very nature, are always more or less removed from the real ability to pay of the persons concerned, and this distance will always depend on the degree of proximity of the factual datum captured by the rule as the trigger of the consequence it establishes, that is, for arriving at the presumption or the presumed result.
That is why the CSJN (Argentina's Supreme Court of Justice)22, when analyzing the technique of using presumptions, has held that “the problem of presumptions in tax matters is the result of the tension between two principles: that of tax justice and that of ability to pay, and that is why ‘they require an intelligent, concrete and rational use’”.
Thus, it has been argued23 that “(…) withholding and/or perception regimes must be located only at the ‘source’, which is, as Villegas24 says, taxation concentrated at the origin. The notion refers to the means, moments, places and times in which the economic activities that generate the taxed taxable events are carried out, which are deemed appropriate for drawing in and advancing portions of taxes without undermining legality. The closer the fit between the source and the capture, the greater the certainty there will be regarding the actual materialization of the elements of the taxable event. Conversely, the greater the distance between one datum and the other, the lower the chance that the withholding will meet the legal attributes of that event giving rise to the levy”.
Now, in order to know whether a given collection regime fulfills its purpose, that is, “to facilitate and secure the collection of manifestations of ability to pay immediately linked to the taxable event”, we must take two issues into account: on the one hand, whether the amount withheld or perceived constitutes income derived from an activity taxed by the local tax within the jurisdiction for which collection is made and, on the other, whether the indications or presumptions used in the regulations are close to, or directly linked with, a greater or lesser degree of activity carried on in the jurisdiction. In other words, to the extent that indications or presumptions disconnected from any real economic manifestation are used, the collection regime will not be collecting taxes but extracting portions of the taxpayers' assets not reached by the tax and, ultimately, will not be fulfilling its purpose.
In this sense, it has rightly been argued25, in relation to the collection regime on bank credits, that “(…) a bank account does not meet the requirements of a ‘source’ for the advance capture of the levy, insofar as there is no certainty that the sums deposited come from the exercise of taxed activities at a given time and place (…)”.
The same happens with collection regimes that set up as their source certain parameters or criteria which they call fiscal risk criteria, and which use nothing more than breaches of formal and/or substantive duties26 as indicators of the fiscal risk of the non-compliant taxpayer.
We understand that breaches of formal or substantive duties do not reveal a greater or lesser degree of activity taxed under the IIBB or any other local tax within a jurisdiction, so they can never be considered a source or parameter for a collection regime, especially when the regime provides that the person classified as “fiscally risky” is to be included in a fiscal risk register and, as a consequence, must bear withholdings and perceptions at the highest of the rates provided for the SIRCREB27.
We understand that the greater or lesser degree of fulfillment of the duties placed on a taxpayer, whether substantive or formal, does not reflect a manifestation of ability to pay that would justify an increase in the tax burden or any other measure to be adopted based on the presumption of “fiscal risk”, as some local tax authorities provide.
Indeed, at most these conducts may deserve the penalties provided for in the local tax codes28, but they in no way justify an increase in the tax burden previously established by law for a person. Clearly, in these cases it is not taxes that are being collected; rather, portions of the taxpayer's assets not reached by the tax are being extracted.
On this point, we29 have stated, with respect to a regime of similar characteristics30 established in the Autonomous City of Buenos Aires, “(…) that the collection regime based on fiscal risk criteria (…) not only fails to fulfill the revenue-raising purpose it should have, because the indications it uses are not directly linked to the taxable event of the IIBB, but also because it in fact provides for a concealed and unconstitutional penalty, as it violates the principles of culpability, maximum statutory specificity, certainty and legality”.
Another example of collection regimes that do not respect the concept of source we have been developing are those that impose the obligation to make payments on account of the tax as a condition for goods to enter or leave a given province or jurisdiction.
In these cases, by imposing the generalized obligation to make payments on account as a condition for the movement of goods within Argentine territory, in addition to violating express constitutional provisions prohibiting internal customs barriers31, a manifestation of wealth (the entry of a good into, or its exit from, the provincial territory) is set up as the “source” for the collection regime that is not immediately linked to a greater or lesser volume of activity related to the taxable event of the tax in that jurisdiction; this is precisely because no distinction is drawn between goods entering the Province for final consumption, for sale or to be incorporated into a production process, and those entering temporarily as a consequence of territorial transit while the good is being transported to another provincial jurisdiction or another country, which makes it impossible to know, even with a low degree of probability, whether or not the taxable event of the tax may come to be perfected in the jurisdiction applying the collection regime in relation to that manifestation of wealth. In other words, the presumption established by the collection regime is not reasonable.
Furthermore, with regard to the IIBB, it cannot be overlooked that the jurisdiction seeking to tax the income of a taxpayer under the Multilateral Agreement (Convenio Multilateral) by establishing a collection regime must prove that at least a portion of that taxpayer's activity is carried on within its territory, since without territorial nexus there is no tax base to be apportioned under the rules of the Multilateral Agreement and, therefore, no tax to be collected at source.
Likewise, we maintain that the acquisition of goods from third parties located in the jurisdiction cannot be considered, on its own, as a criterion for extending jurisdiction, since purchases—by themselves—do not constitute an objective parameter that reasonably reflects the person's activity in that jurisdiction, much less that such activity is carried on habitually, as required by the taxable event of the tax.
Thus, it has rightly been pointed out that “(…) the fact that it is the turnover tax makes things even more complicated. There is no segment of the production and value chain left outside the system of payments on account. From the raw material to the deposit of the final check into an account, everything warrants advance capture. Unreasonableness through disproportion reigns, as not only the formal duties to be fulfilled increase, but also the burdens on one and the same business. Final consumption will play the role of sacrificial victim of so much distortion, given the cumulative effect and the lack of neutrality and progressivity of the levy32”.
3. Conclusions
On the basis of what has been set out throughout this study, we can conclude that collection-at-source regimes, being based on presumptions—beyond the fact that their generalized application to a universe of taxpayers with dissimilar activities is inadvisable—if used by local jurisdictions as a collection technique, must choose as indications or presumptions only those that can reveal with a high degree of probability that the transaction or economic fact in question constitutes an externalization of wealth that—almost certainly—will be reached by the taxable event of the tax.
That the obligation to act as collection agents should only be imposed on those persons who, in addition to being directly or immediately linked to the taxable event of the tax, have a territorial nexus and carry on an activity taxed by that tax in the jurisdiction where they are designated as withholding or perception agents.
Finally, we maintain that, since these are extremely onerous public burdens, respect for the principle of legality must be required in the implementation of collection-at-source regimes and of all the elements that make them up, since the CSJN33 has held “(…) that it is not admissible that, when establishing procedures intended to ensure the normal and expeditious collection of public revenue, recourse be had to instruments that break the constitutional order. The mere convenience of a mechanism for achieving a governmental objective—however laudable it may be—in no way justifies the violation of the guarantees and rights enshrined in the constitutional text”.
4. Bibliography and case law
ALMADA, Lorena, “Coexistencia de múltiples regímenes de retención y percepción provinciales: alternativas de armonización”, lecture delivered at Panel I of the XIII Seminario Internacional sobre Tributación Local, FEIT, Rosario, Santa Fe, November 2013.
CASAS, José O. and FREYTES, Roberto O. (eds.), La jurisprudencia tributaria de la corte suprema de justicia de la nación –a 150 años de su primer sentencia-, AAEF, Errepar, Buenos Aires, 2013.
CASAS, José O., Derechos y garantías constitucionales del contribuyente, Editorial Ad Hoc, Buenos Aires, 2002.
GARCÍA VIZCAÍNO, Catalina, Manual de derecho tributario, 2nd edition, Abeledo Perrot, Buenos Aires, 2016.
EZEYZA, Mariano A., “El riesgo como pauta de recaudación”, Ed. La Ley, published on 04/08/2016.
EZEYZA, Mariano. A., “Acerca de la naturaleza de la multa por omisión de impuestos en la CABA. Una crítica al precedente "El Bagre Films SA"”, Revista de Derecho Penal y Procesal Penal de la CABA, No. 4, July 2017, IJ Editores Argentina, IJ-CCCLXXVII-245, published 12/07/2017.
FERNÁNDEZ, Luis O., “Impuesto a la renta de las empresas. Regímenes simplificados y bases objetivas”, Anales de las XIII Jornadas del Instituto Latinoamericano de Derecho Tributario, Córdoba 2006.
JARACH, Dino, El hecho imponible, 3rd edition, Abeledo Perrot, Buenos Aires, 1982.
KACENELSON, Anabella and ALDERETE KEHOE, Tomás, “Desnaturalización de los regímenes de recaudación del Impuesto sobre los Ingresos Brutos”, paper presented at the II Jornadas de Derecho Tributario Provincial y Municipal, AAEF, Buenos Aires, 2015.
Modelo de Código Tributario para América Latina OEA-BID, 1967.
Modelo de Código Tributario elaborado por el Centro Interamericano de Administraciones Tributarias (CIAT), 2015.
SFERCO, José M., “Sobre agentes de recaudación en sede local. Citas Jurisprudenciales que ponen límites al caos”, Revista Impuestos, March 2015, La ley, Buenos Aires, 2015.
SFERCO, José M., “Análisis crítico de los agentes de recaudación del impuesto sobre los ingresos brutos sobre acreditaciones bancarias”, in Derecho tributario provincial y municipal, URRESTI, Esteban J. (coordinator), Ed. Ad Hoc, Buenos Aires, 2007.
SOLER, Osvaldo H., “Abuso del Estado en el ejercicio de la potestad tributaria”, Revista Impuestos, September 2003, La ley, Buenos Aires, 2003.
SOLER, Osvaldo H., “Sentencia en contra de facultades del municipio de Córdoba para designar agentes de retención”, Doctrina Tributaria, vol. XLI, July 2020, Errepar, Buenos Aires, 2020.
VILLEGAS, Héctor B., Curso de Finanzas, derecho financiero y tributario, 7th edition, Editorial Depalma, Buenos Aires, 2001.
VILLEGAS, Héctor B., Curso de finanzas, derecho financiero y tributario, 8th edition, Ed. Astrea, Buenos Aires, 2002.
VILLEGAS, Héctor B., Los agentes de retención y de percepción en el derecho tributario, Ed. Depalma, Buenos Aires, 1976.
CSJN, "Rectificaciones Rivadavia S.A. c/A.F.I.P. s/ordinario", 12/07/11.
CSJN, “Hermitage S.A. c/ Poder Ejecutivo Nacional - Ministerio de Economía y Obras y Servicios Públicos - Título 5 - ley 25.063 s/ proceso de conocimiento”, 15/6/2010.
CSJN, “Mera, Miguel Ángel c/ (TF 27870-I) DGI”, 19/3/2014.
CSJN, “Administración Federal de Ingresos Públicos c/ Intercorp SRL s/ ejecución fiscal”, 15/6/2010.
CSJN, Fallos C. 486. XLIII, “Camaronera Patagónica S.A. c/Ministerio de Economía y otros s/amparo”, 15/04/14.
General information only. This is not professional advice on any particular case.