Following the reduction of PAIS taxes, Luis Caputo asks businessmen to “comply” and lower prices

The Minister of Economy, Luis Caputourged businessmen on Monday to comply with the price reduction, after the reduction of the tax rate COUNTRY TAX which came into effect this Monday.

“Today the reduction of the country tax begins. The benefiting sectors have committed to lowering prices. It is important for society that they comply”the minister said through his “X” account.

Caputo said that “people’s distrust is not only towards those who govern, but also towards the business community that profits from these measures.”

“People have to see it reflected in their finances “This is the right path: lower inflation, lower taxes, restore credit for individuals and SMEs and eliminate regulations,” stressed the head of the Treasury.

Caputo’s pressure was supported by the Minister of Modernization, Federico Sturzenegger, who also highlighted in “X” that “The chainsaw returns transformed into benefits for all Argentines. Less spending means less taxes. The Minister’s work is immeasurable.”

Reduction of the PAIS Tax: the officialisation of the measure, the Government’s expectations and the caution of businessmen

The national government published today decree 777/2024 which made official the reduction of the Country Tax rate from 17.5% to 7.5% and, in this way, it now came into effect for the importation of goods and freight.

Among the considerations, the Executive Branch pointed out that “within the framework of the measures adopted with the objective of contributing to the stabilization of prices, it is necessary It is necessary to reduce the rate of the COUNTRY TAX for the purchase of foreign currency notes and foreign currency carried out by residents in the country for the payment of obligations for the importation of certain goods and for the acquisition of freight services and other transportation services for foreign trade operations.”

With the reduction of the PAIS tax, the Government hopes that starting in September the prices of products with imported components will begin to fall. “I think we’re going to see a drop in prices in September,” said Minister Caputo in recent statements.

The The tax burden of the PAIS tax on the final sale price with VAT can be 2%, 4% and 6% for certain domestic goods that use imported inputs, depending on the cost structure.

If the incidence is 2%, the reduction in the tax would imply a price drop of 1.14%.

Businessmen expressed caution about the price drop since there are other costs that have increased in parallel, such as utility rates and fuel. Where the impact promises to be greatest is in the countryside, since it will have a strong impact on the purchase of inputs, such as fertilizers.

There will also be improvements in the automotive industry, where more than half of the components are imported.

PAIS Tax: the Chamber of Commerce’s message of support

The Argentine Chamber of Commerce and Services (CAC) expressed its “satisfaction” with the reduction of the PAIS tax for imports of goods and freight established by the National Government, and considers that it will be “beneficial for the companies directly affected, consumers and the national economy as a whole.”

The reduction of the rate “implies a reduction of tax pressure that support the firms that carry them out, which will allow them sell at more competitive prices, “thus alleviating the productive chain that they comprise, collaborating with the sustained process of disinflation underway and promoting the competitiveness of the entire national economy.”

“Consequently, we share and welcome the decision of the National Executive Branch to gradually reduce current taxes, along with a progressive reduction in spending, in order to preserve fiscal balance, an irreplaceable pillar of the macroeconomic order,” he explained.