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VAT collection fell 1.71% in the quarter. Did purchases in Argentina influence it?

VAT collection fell 1.71% in the quarter. Did purchases in Argentina influence it?
September 8, 2023 – 19:04

The Chamber of Commerce and Services of Uruguay reflected the drop in domestic consumption in real terms between April and June.

Photo: Auren

The collection of the VAT decreased 1.71% year-on-year in real terms during the second quarter, according to data from the September economic bulletin of the Chamber of Commerce and Services of Uruguay, which can be interpreted as a regression of the consumption internal, at times when many people cross Argentina to take advantage of the exchange difference.

In fact, according to official data from the DGI, the perception of VAT reached 24,169 million pesos in July 2023, accumulating a decrease so far this year of 1.8% for a tax that represents almost half of the collection gross total.

In this regard, the CCSUy pointed out that the VAT recorded an interannual drop of 1.71% in the second quarter of the year and argued that its perception “is used as an indicator to analyze how the consumption of goods and services evolves in the domestic market.”

The report indicated that domestic consumption “had a strong deceleration, with revenue growing by just 0.01%.” To this he added that the collection of VAT Imports had an interannual decrease of 5.01%, varying negatively as in the last quarter.

The government closely monitors purchases in Argentina and its impact on consumption

Faced with this panorama, it is not surprising that the government monitors what is happening with the increasingly frequent crossings of Uruguayans to Argentina, where the price gap reached at times up to 199% and encourages purchases in that country, something that directly impacts domestic consumption.

Thus, the Minister of Economy and Finance, Azucena Arbeleche, Whitewashed in dialogue with Bloomberg that “Uruguayan purchases in Argentina harm the growth and tax collection of Uruguay”.

Furthermore, he admitted that “the budget’s consumption and tax collection projections incorporate consumer spending in Argentina”. In that sense, a study by Exante reflected that the exchange difference with the neighboring country will take half of domestic consumption spending.

Source: Ambito

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