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How could the tax situation be in Argentina with the entry into force of the RIGI and the fiscal package?

How could the tax situation be in Argentina with the entry into force of the RIGI and the fiscal package?

Another non-tax aspect, but one that deserves mention, is that you can enter the RIGI, acquiring a part of a companythat is, buying a part of the share package.

So, in the tax table we have the RIGI:

  • Reduce the burden of tax on Profits from the maximum rate of 35% to a fixed rate of 25%, that is, a decrease of 10 points
  • Admits one accelerated amortization of goods. This means that amortization, that is, the deduction of income tax for the wear and tear of machinery, instead of taking place in 10 years, this deduction is anticipated and can be done in 2 years.
  • The unlimited deduction of debt interest between companies linked to abroad. This currently has a limitation and that is to avoid tax evasion through inter Company loans. With this regime it is allowed without any limitation.
  • They can be compute losses or losses from previous years without time limit, updating them for inflation and also allowing transfer to a third company this loss so that you can enjoy it and pay less income tax.
  • In relation to the dividendsthe rate is reduced from 7% to 3.5%.
  • Payments abroad for services or locations, which Today the rate reaches 35%, will pass to be exempt from paying taxes, that is, 0% rate. It would be generating a undercover vehicle to simulate the dividend payment and not pay taxes even that 3.5% that he proposes.
  • If in the future, a global minimum tax of 15%, as you are suggesting OECDor for example a minimum property tax of 2%, They cannot be applied in the RIGI, because the project expressly prohibits it.
  • For the case of the company reorganizationfor example a merger or division or transfer between an economic group or group, will not have requirements or controls to avoid the sales simulation as it currently exists in national taxes in our country.
  • In the case of VATthey are admitted to the investor when making a purchase or import, generate tax exemptions without any quota from the government. What’s more, if the coupon is not applied, within a period of 3 months you can request a cash refund of the VAT paid.
  • The large companies who invest will be able compute 100% of the tax check in the income tax, while today they can only compute 34%.
  • Total exemption from taxes on imports and exports, also including the country tax, that the current government raised it to the rate of 17.50%. In the case of export duties, currently for hydrocarbons the rates are 15% and even for agricultural products they reach 33%.

TAX PACKAGE

Within the project on the fiscal package, we will analyze only those related to money laundering and the personal property tax.

In reference to Whitening, In short, it enables launder funds without paying the tax up to the sum of US$ 100,000 per person, let us remember that the laundering of law 27,260, in 2016, the amount freed from paying the special tax was reduced to US$ 20,000.

In relation to rates, It is set adjustable between 5% and 15%, for the part that exceeds US$ 100,000, depending on the moment in which the externalization or laundering of the assets is accessed.

There is a novel and, above all, controversial aspect which is the possibility of accessing the laundering by non-resident subjects in our country, that is, they are not taxpayers registered with AFIP and can claim that they obtained marginal and undeclared income in our country and thus be able to access the benefits of money laundering.

This could wake up alerts to international organizations and especially to the FATFInternational Financial Action Group) that by not investigating the origin of funds, one or more maneuvers may be open to laundering money in our country for possible economic crimes such as smuggling, drug trafficking, tax evasion in another country.

On the other hand, and in relation to personal property taxthe fiscal package, practically proposes the tax death certificatebecause it suggests a rate almost zero of 0.25% of assets until 2038.

Only apply one tax strategywe could call it that, to the extent that in the first 5 years, You could choose to advance the tax by paying a fee 0.45% on the equity at closing and then not pay for those 5 years. It only increases to just 0.5% if they are goods that are the product of laundering.

In short, a tax is paid at the current rate that reaches 2.25%, and 0.45 * 5 =2.25% is paid, that is, the same rate of a year or fiscal period with the current text, 5 years would be covered. And after the fifth year, only 0.25% is paid until 2038.

OUR TAX COLLECTION

According to AFIP data, in 2023 the amounts collected from the most representative taxes, expressed in pesos and dollars (annual average) and in proportion to GDP, were the following:

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Source: Own elaboration based on data from AFIP, BNA and INDEC.

As seen, the Tax pressure For the year 2023, for national taxes (provinces and municipalities are excluded) it was 14.51%, the main ones being those related to VAT, Profits and social security that represent almost 80% of the total collected, and together with customs and PAIS taxes, they account for 95% of the collection; That is to say, 6 taxes account for practically all of the collection.

About “BUY WITHOUT VAT”

It is necessary to mention in relation to the VAT tax, whose collection is the highest, as a consequence of the discontinuation of the “buy without VAT” policy, it seriously affects the lowest sectors of the population. As we all know, VAT is the most regressive because a product impacts much more on the population with fewer resources than a citizen with higher incomes.

It is recalled that the “buy without VAT” allowed a VAT refund of 21% of the value of basket type 2, which today’s value is 828,158, with which the Argentine was reimbursed up to the sum of $174,000 per month.

So with the non-continuity of the measure, according to the estimate due to the characteristics of the “buy without VAT” program”, implied a fiscal effort of approximately 2% of GDP with total of beneficiaries between 11 and 15 million Argentines. In dollars they are 12,000 Million annual VAT refund.

¿HOW IS THE RIGI, MONEY LAUNCHING AND PERSONAL PROPERTY INVOLVED ON THE TAXES COLLECTED?

According to journalistic publications, it is estimated that if the RIGI is approved, a investment amount of approximately 25 billion dollars until the year 2030. Now, as the system is proposed, these funds could enter those funds to acquire certain companies that are currently in operation, even enter part of it through money laundering, or we should ask ourselves the question if not Whether or not the RIGI would exist or not come into force, those investments would come in the same way or not, at least allow us to have the benefit of the doubt since with the natural resource potential of our country they could perfectly come close without having to grant such tax benefits as the RIGI and Whitewashing they provide. Furthermore, they have been doing it for several years. In other words, investments, for example in hydrocarbons, mining, among others, already exist.

Starting from the hypothesis that the investment is 25,000 Million Dollars in these 6 years and applying the tax benefits that the RIGI program introduces, the tax benefit for the 30 years of tax stability amounts to 65,000 million dollars.

For this, it should be clarified, an effective profit rate of 10% and an average annual export of 10,000 million dollars were estimated, according to the profitability proportions published by CELAG and the projection of future exports that the government itself disseminates. . However, there may be other benefits that cannot be estimated, so the total benefit is likely to be even greater.

Now, in relation to personal property, the almost disappearance of the tax will imply that for 14 years practically nothing is taxed or an insignificant amount and if we quantify it in relation to the amount of the last collection, it will represent a tax reduction of about 26,000 million dollarsfor the highest sectors that pay the personal property tax.

And if we add the possibility of whiten To those who own financial assets abroad, the benefit in this case would be incalculable. According to the latest report of the INDEC, “Balance of payments, international investment position and external debt”, the Argentines They have financial assets abroad for US$280,000 million.

Suppose if 5% decide to launder these funds for 56,000 million dollars, they will only pay 2,800 million dollars in special tax, and They will save themselves from paying for personal property for 14 years a sum of U$S 19,000 Million Dollars.

IN CONCLUSION

We could affirm the following:

  • the tax benefits for the alleged investments of the RIGI, amount to 65,000 million of dollars in the 30 years.
  • Tax benefit for the reduction and almost exemption of the personal property tax of 000 Million dollars further 19,000 millions for money that can be laundered, totaling 45,000 million dollars for 14 years.

TOTAL RIGI BENEFITS + PERSONAL PROPERTY + MAINTENANCE: 110,000 MILLION DOLLARS. Amount that represents almost 20% of GDP.

And the other side is the removal of possible benefits in relation to the elimination of the “buy without VAT” program of up to 12,000 million dollars annual.

Unfortunately, what is observed is a clear transfer of tax benefits from one sector to another. That is to say, it removes benefits from VAT refunds on foodstuffs in the basic basket for a sector and grants tax benefits to large investments.

Source: Ambito

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