Within the framework of the regulation of the Fiscal Package, he Government will eliminate VAT withholdings and Earnings on sales of businesses, announced the Ministry of Economy. The measure, which was already published in the Official Gazette, will be effective from September 1.
In the regulation of the Fiscal Package, the Ministry of the Economy expanded the benefits to the private sector included in the norm and defined that there will no longer be withholdings on account of Profits and VAT for businesses in sales with debit, credit, purchase and similar cards, groupers, aggregators and other electronic payment method processors. Article 102 of the Fiscal Package defined that these exceptions had a limit equivalent to 10,000 Purchasing Value Units (UVAs).
The measure represents an enormous benefit to the formal private sector that invests and bets on the growth of the Argentine economy, said the Treasury Palace. In addition, it considered that the measure will allow “fostering the formalization of transactions, financial inclusion and reducing the costs of payment systems.”
According to the Ministry of Economy, the decision also allows progress in the objectives of the National Government to boost economic activity and encourage use of payment methods that provide greater transparency and formality to the economy.
How it impacts SME businesses
According to CAME, the measure is “positive” since by not paying this tax burden, the merchant “will have greater working capital for the development of his business. “This will also encourage formal sales, since SME businesses will receive more funds for each settlement,” said the president of CAME, Alfredo Gonzalez.
In turn, since there are no withholdings on sales settlements with debit cards, credit cards, and digital platforms, the merchant will have immediate access to the amount of the sale made.
“Businesses with a settlement of up to 11 million pesos will be excluded from withholding taxes. In this way, they will not see their billing amounts reduced,” he added. GonzalezIt should be noted that this is a request that the CAME Tax Commission had already made to the Federal Public Revenue Administration (AFIP). The SME entity is also working with provincial governments so that the collection agencies, through resolutions or regulatory provisions, eliminate the withholding of the Gross Income Tax on each of the debit and credit card settlements.
From Argentine Industrial SMEs (IPA), Daniel Rosato highlighted Scope which is an “important help because the merchant is motivated to sell by card and make a small discount. In some way, It is a motivational tool to increase sales.”
“We think it’s positive and can have a rebound in the industry,” he explained.
In addition to these benefits for merchants, credit card operators also benefit from the increased use of plastic cards over cash.
How it benefits consumers
- It discourages cash purchases that had a greater discount than using a credit card.
- It discourages merchants from charging an “extra” percentage for using debit or credit cards at the time of purchase.
- The merchant can offer better discounts.
Boosting sales
Although some measurements show signs that the recession would have bottomed out in the second quarter of the year, that is not what is happening in the retail trade of small and medium-sized enterprises (SMEs) that the CArgentine Federation of Medium-sized Enterprises (CAME). The measure undoubtedly aims to boost the economy and enable small and medium-sized businesses to have higher sales, impacting the entire marketing chain.
In July, SME retail sales fell by 15.7% year-on-year (that is, compared to July 2023), accumulating a decline of 17% in the first seven months of 2024 compared to the same period last year. But what is most revealing, to assess the situation, is that sales measured in a “deseasonally adjusted” way (that is, eliminating the factors that make certain months more commercially favorable than others) also fell, in this case by 1.6%, compared to June.or, which indicates that although the pace has slowed, the decline continues. That is, SME retail trade has not yet bottomed out.
“SMEs are trying to stay afloat in a very complex economic and financial context,” the bank’s statement said.
The surveyed traders unequivocally pointed out that the main problem in July was the lack of sales. In second place were the high production costs.Retail trade demanded a reduction in national, provincial and municipal taxes “to return profitability to the sector.” This is a first step.
Source: Ambito
