The collection of the VAT fell 2.55% between July and September and marked its fourth consecutive quarter of decline, according to the latest economic bulletin of the Chamber of Commerce and Services of Uruguay (Ccsuy), despite having shown an improvement in the internal consumption.
The report of the Ccsuy indicated the fall of 2.55% despite an improvement in the collection of domestic consumption, which grew by 0.96% compared to the previous quarter. However, the perception of VAT by imports showed an interannual decrease of 8.75%, worsening compared to the period between April and June.
The lower VAT collection is a phenomenon that General Tax Directorate (DGI) has been reflecting for a year, since during the second quarter the decrease had been 1.71%, in the first quarter it reached 1.91% and during the end of 2022 it was 1.63%.
With all this, to see a positive quarter in terms of the perception of this tax, we must go back to July-September 2022, when there was a year-on-year increase of 5.62%, thanks to a 6.49% improvement in consumption. domestic and 4.12% in imports.
The diversion of consumption towards Argentina
On the other hand, the exchange difference with Argentina causes many Uruguayans cross the border to make purchases and take advantage of the price gap in the neighboring country.
In fact, a macroeconomic bulletin of the CED indicated months ago that Uruguayans’ spending on Argentina It reached 596 million dollars if only the first semester is counted, just 63 million dollars below what was observed in all of 2022, so an expense greater than 1,000 million dollars is anticipated in the neighboring country, that is 50% more than pre-pandemic levels.
This will entail a diversion of consumption that the DGI will stop collecting, something that was even admitted by the Minister of Economy and Finance, Azucena Arbeleche, who in an interview with Bloomberg admitted that “the budget’s consumption and tax collection projections incorporate consumer spending in Argentina”.
There may be a rebound at the end of the year
Looking to the future, the DGI showed a final positive figure in collection, which had a real increase of 1.9% during October, making it a positive month after four months of decline. Specifically, VAT receipts stood out in the report, whose revenues showed an improvement of 3.7% year-on-year.
In the report of the agency dependent on the Ministry of Economy and Finance (MEF), it was reflected that VAT collection reached 25,249 million pesos, representing 46.6% of the country’s total gross collection, although the variation of the moving year ended in October is negative by 1.7% and The real interannual variation for January-October was also negative by 1.5%.
On the other hand, the higher perceptions for the Tax on the Income of Physical Persons (IRPF), which increased 6.2% year-on-year compared to October 2022.
Source: Ambito
