It was a “temporary” tax created by the government of Alberto Fernandez to discourage the demand for foreign currency, in a context of shortages at the end of Mauricio Macri’s administration in 2019. Initially, it taxed the purchase of savings dollars and goods and services acquired abroad at 30%.
Then, In 2023, 7.5% will be added to imports (except for some products in the basic basket and supplies for certain public works) and for services of freight; in addition to certain payments of services, such as IT or maintenance and repair, and professional advice, in those cases with a rate of 25%.
The tax acted as a complement to the exchange rate and, unlike others that remain, President Javier Milei decided not to renew itrespecting its expiration date, so this Monday the 23rd it formally ceases to exist.
In practiceimports have not paid it since the end of Novemberwhen the 95% on account stopped being collected. Two months earlier, at the beginning of September, the rate for the import of goods and freight was reduced from 17.5% to the original 7.5%. The Milei Government had raised it “temporarily” to that percentage at the beginning of its administration.
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It is expected that with the total elimination the reduction in costs is transferred to pricesespecially in imported items, although it may not be linear or generalized in local products that contain foreign inputs.
The Government is confident that this step will help consolidate the slowdown in inflationbut in the sector they admit that businessmen could take advantage of recovering margins after a year of low profitability due to the growing rise in costs and the fall in sales due to the drop in consumption.
Foreign purchases of tourism and clothing and electronics will become cheaper on platforms such as amazon, and streaming consumption such as Netflix, Disney and Spotify, which will increase pressure on the Central Bank’s reserves.
He dollar card ($1,670) is made up of the official dollar ($1,044) plus 60% of receipts: 30% in advance of Earnings and 30% for the COUNTRY Tax. When the latter is cancelled, its price will drop by 30%so as of this Monday it would be at $1,355, reducing the tax burden by half, since the 30% corresponding to Profits will continue to apply.
Credit card purchases paid after this Sunday will not pay the tax, regardless of when the purchase was made. Banks are working to adapt their systems to reflect the change in upcoming statements.
Consultants expect that the disappearance of the Country tax will have a greater effect on wholesale inflation than on retail inflation.
After the reduction of the rate from 17.5% to 7.5%, supermarkets confirm the price reduction announced by the Government of between 2.4% and 10% on imported foods, but they clarify that it is incipient and we must wait until the replacement of merchandise, delayed by consumption that does not take off.
They assure that the casualties were specific and that the assortment of finished products that come from abroad is scarce.
The expiration of the tax will benefit about 11 million people who pay it. However, with the MEP dollar as the most convenient exchange rate on the market ($1,130), the proportion of Argentines who pay for consumption abroad in pesos falls and, on the other hand, the number of those who pay corresponding expenses in dollars grows. to foreign currency to avoid taxes.
He COUNTRY Tax grew in participation in collection total as its scope expanded and the rates were raised.
It was the seventh most important tax in 2023, with a contribution of 0.8% to GDP and it is estimated that 2024 will close with a weight of 1.2%.
In November (latest data available), it raised $389,468 million, 97.6% more year-on-year. Between January and that month, there were $6.1 billion, 5.1% of the total collection ($118.3 billion). Its disappearance will force you to compensate for that loss with the entry of other income or cutting expenses.
Consultants highlight the elimination as they consider it a distorting tax, characteristic of a dysfunctional economy and restrictions.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
