Argentina needs a tax reform that complies with a transparent, agile and predictable processwhich releases productive resources and strengthens the relationship of trust between taxpayers and the State. Our system collects a lot, but it should be efficient in rewarding production, encouraging investment and strengthening international competitiveness and not penalizing those who comply.
The current structure combines record tax pressure, extreme complexity and low quality of public services. This erodes the legitimacy of the system and turns tax policy into an obstacle to development. This is how, The starting point must be to recover the principles of equity, simplicity and predictabilityso that taxes can once again be a tool of progress.
Today, most of the collection comes from taxes on consumption and transactions, with less weight on income and assets. This bias erodes purchasing power and generates inequality.
It is necessary to reduce dependence on consumption taxes and strengthen a scheme based on income and assets. The redesign of the Income Tax It must take into account inflationary distortion, so that only real income is taxed and not fictitious nominal results.
Another urgent challenge is to expand the taxpayer base. Argentina leads the global rankings of tax pressure on the formal sector, while large sectors remain outside the system.
Formalizing and simplifying entry into the tax regime would allow the effort to be distributed more fairly. Furthermore, in parallel, “coordinate” the Nation, provinces and municipalities to avoid new distorting taxes and guarantee that the effective pressure on business profits remains at internationally competitive levels.
What changes does the Argentine tax system need?
The system must eliminate distorting collection regimes at the source, which generate permanent balances in favor and immobilize working capital. It is necessary to eliminate these mechanisms or transform them into payments on account with automatic and agile refunds.
Added to this is the need to review exemptions and privileges. Today there are more than a hundred preferential treatments, many without economic or social justification. Maintaining them without periodic evaluation erodes horizontal equity and transforms tax policy into a network of sectoral benefits. Only incentives linked to innovation, employment and productive inclusion should remain, with expiration clauses and control of results.
VAT, for its part, presents one of the highest rates in the region, combined with a mosaic of reductions and differential treatments. It stopped being a neutral tax and became a financial cost. Recovering its neutrality requires a homogenization of VAT rates that reduces the proliferation of special rates and ensures a level playing field for all sectors.
In addition, implement a system of automatic and agile refund of tax credits, particularly for exporters and activities with a high investment component, guaranteeing that VAT recovers its nature as a neutral tax and does not become a structural burden on production.
It also imposes a reordering of fiscal federalism. The current co-participation law generates perverse incentives: provinces and municipalities create new taxes — such as Gross Income, Stamps or municipal taxes — to compensate for the concentration of resources in the Nation. This overlap multiplies the burden on the same taxpayers and weakens competitiveness. A new federal scheme, with clear rules and transparency in distribution, is a condition for stability.
Simplifying the system and making it equitable does not mean collecting less, but collecting better. It involves eliminating low-impact taxes, automating returns and facilitating compliance, so that paying taxes once again becomes part of a reliable tax contract.
Reforming the tax system is not a technical option: It is an essential condition for growing again. A transparent, simple, agile, equitable and predictable system can become the true engine of development, investment and formal employment. Only in this way can fiscal policy be transformed into a true development lever, which rewards formality, promotes investment and strengthens fiscal federalism, laying the foundations for sustained and inclusive growth.
Tax Partner, BDO in Argentina
Source: Ambito
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