PAIS Tax: a tax that collected the equivalent of $17.3 billion in five years ends

Among other taxes “transitory” that were established is the tax on bank credits and debits (also known as the Check Tax), created at the request of Domingo Cavallo in the midst of the Convertibility crisis. It is the temptation of every government to try to keep resources that are easy and immediate to collect.

Another transitory tax was the Solidarity and Extraordinary Contribution, created within the framework of the pandemicin 2020, which, after being paid once, was not repeated.

The end of the COUNTRY Tax is coming

In the case of Javier Milei, will allow the PAIS Tax to die of “natural death” on December 23, day on which they will be fulfilled five years from its entry into force. The Emergency law promulgated by former President Alberto Fernández included the creation of this tax whose purpose was to avoid a devaluation.

Instead of applying a nominal correction of the exchange rate, the Fernández government decided to apply a tax that would make, above all, dollars for hoarding more expensive, tourism and payment for services abroad, which are usually the main source of dollar loss.

Then, they extended the application of the tax to all sales of dollars made for anything. That is, they extended the tax to all imports with the clear objective of curbing foreign purchases as much as possible and generating a “devaluation” effect but without touching the nominal exchange rate.

How much did the PAIS Tax collect?

According to a report, the Argentine Institute of Fiscal Analysis (IARAF), the tax will have gone down in history and will leave a collection equivalent to $17.3 billion. It was an essential component in 2024 for the Minister of Economy, Luis Caputo, could achieve the objective of having a primary fiscal and financial surplus. To this end, to the brutal devaluation of the pesos at the beginning of the Government, it added that The rate will go from 7.5% to 17.5%. Then he presented it as a “tax reduction,” which was a return to the general rate.

“The PAIS tax dies, contributing US$17.3 billion during its 5 years of life. The great fiscal challenge of replacing its collection in 2025,” states a report by the Argentine Institute of Fiscal Analysis (IARAF).

The work points out that, ““If the budget guideline is met, the PAIS tax will end its life on December 22, having contributed a total accumulated collection of 3.05% of GDP,” and warns that “one of the great fiscal challenges of 2025 will be the replacement of this important non-shareable collection, already raised in the 2025 Budget bill.”

In the bill, which is not yet known for certain whether it will be dealt with by Congress, there is no request for renewal of the dollar sales tax, so The Government is going to have to look to replace it in another way. According to the private consulting firm, This year it contributed 1.1% of GDP in resources. In 2020, which was the first year of its application, it left 0.5% of GDP; in 2021, 0.24%; 2022, 0.42% and in 2023, 0.80% of GDP.

Speeding up the payment of imports so as not to fall into default

One element to take into account is that, This year, the Government had to speed up the payment of imports to avoid falling into legal non-compliance. The country tax Imports are paid almost entirely in advance, for 95%. The remaining 5% is paid when the company buys the dollars to pay.

This year, the Government went from a scheme of four payments of 25% each, to one of two of 50% and, finally, to one of 100% in 30 days. The problem is that there were declared operations that had already paid 95% of the tax due after December 23 that would not have been required to pay it in advance, since Advance payments cannot be collected for a tax that will not exist at the time the taxable event is perfected (the purchase of dollars).

That is why, from the Government, the payment scheme for imports in installments was quickly dismantled so that All operations prior to November 23 are paid before the tax ends. If I hadn’t, I would have had to return money. According to estimates of the former head of the Customs, Guillermo Michell, the Government thus managed to deposit some $500,000 million into the treasury.