From January 1, the Government will suspend, by decree, the first scale of Internal Taxes for 0km cars, a measure that both vehicle manufacturers and importers have been demanding. In this way, the information provided by Ambit and that will have a strong impact on prices starting next week.
With the sharp increases of more than 40% in car prices in December, As a consequence of the devaluation, the situation of the automotive market was impacted by the effect of what is known as “luxury” tax.
At the moment, all 0km of more than $14,700,000 must pay a 20% taxwhich implies an increase in the values of 25% for this scale due to the way of calculation, while the second scale pays 35% and increases by 50% in the final value of the cars.
This month’s price adjustment led to almost all models being covered by this tax or “capped” below that value to avoid paying it. It is true that many models are being sold on the market at premium prices, especially imported ones, which exceed that value, but since it is a private negotiation between dealerships and buyers, they do not pay the tax.
If the devaluation is transferred directly, all vehicles would have to pay this tax, which would cause excessive increases.
“We must keep in mind that the revenue it generates is not important but that it was applied to stop the outflow of dollars. If they do not make a change, the revenue will fall more because car sales will collapse,” they said from a automotive.
For this reason, the Government was working on a modification in the Internal Tax regime so that fewer cars are affected. “We are with the issue”had recognized Ambitlast week, an official was asked about a possible modification.
“Without a doubt it must be modified. The problem has been identified. Saying when the modification will be made is premature. It is being analyzed,” the source added. Despite being a tax, the modification is not necessary to be made by law, unless a substantive change is sought.
Through a decree, the tax base can be changed and the majority of the 0km are outside the tax without altering the general rule.
It is a solution similar to the one applied at the beginning of Mauricio Macri’s administration, in January 2016, when he eliminated the first stopover and reversed what was done by the government of Cristina Fernández de Kirchner. Alberto Fernández, in 2019, re-implemented the pre-Macri scheme, which is the one in force.
As this media was able to find out, the draft decree being worked on will suspend the first scale of this tax starting in January. The suspension will be temporary and the analysis that officials are carrying out is whether it will be for three or six months.
Meanwhile, there is still no decision made on what will be done with the second scale, which corresponds to vehicles above $27,000,000. The idea, for now, is not to suspend it as well but to lower the percentage of the rate paid so that the models become less expensive and which today is 35%.
The duration is being evaluated based on the period that the Government considers critical due to the high inflation that is expected.
It must be taken into account that the current adjustment of the tax base is carried out quarterly, taking the increase in the cost of living from the previous three months. Today the update that was made on December 1 is in force by law and the next correction would have to be made in March. To modify this form of updating, another law is required. Not to modify or suspend the scales.
With inflation rising sharply, if the scale is not adjusted, with the increases made by automobile companies in January and February, even the cheapest car would have to pay to be considered “luxury.”
Once this period has expired, it will be evaluated whether it is necessary to extend it or return to the current scheme, depending on the inflationary situation.
“The idea is to temporarily carry out and then analyze a possible change in the law. The issue today is to solve the price disorder that exists due to the cap imposed by the tax,” the Government had explained.
Meanwhile, from the car factories, they see this solution as “something possible” at a time with so many emergencies that President Milei must face.
“The decree suspending the application of the first tranche will cover the price disruption due to the devaluation and inflation of the first quarter. Afterwards, it is assumed, the quarterly adjustment that now governs everything is put back into place. If there is no jump in the dollar, it will be fine,” they explained from a terminal.
In any case, the final decision has not been made and depends on the approval that comes from the Minister of Economy, Luis Caputo and, obviously, from Milei, so a longer deadline could be decided.
The idea is that it will come into force next week to allow automakers to update their lists without the cap imposed by the tax today.
With this scenario, regarding car prices, The suspension of the first scale of the “luxury” tax will be a relief and will be passed on to the public. The impact is 25% on the price of 0km.
In a context of lower inflation, the improvement would be felt directly, but with prices that are going to rise sharply, the fiscal “impasse” will only mitigate the impact of the adjustments.
Source: Ambito
