The government of Javier Milei confirmed the date on which the PAIS Tax will be eliminated

He tax For an Inclusive and Solidarity Argentina (PAIS) It is a tax implemented in December 2019 with the objective of “stabilizing the Argentine economy and promoting social inclusion” that was created in 2019 for a period of five years, although on this occasion the Government reported that it will not request its renewal.

According to Law number 27,541, the PAIS tax is valid for five fiscal periods from its entry into force on December 23, 2019, so Your application will end on December 23, 2024.

Javier Milei’s government announced that it will not extend this tax. Congress should approve an extension with a special request, but It will cease to apply as of December 24, 2024.

He PAIS tax was a key tool in Argentine fiscal policy, contributing significantly to the collection and going to social and infrastructure programs.

COUNTRY tax: how it affects the economy

The PAIS tax is a tax that applies to operations carried out in foreign currency:

-Purchase of foreign currency for savings: Acquisition of dollars for hoarding.

-Expenses with cards abroad: Purchases and payments made with credit or debit cards outside the country.

-Acquisition of services and goods abroad: Contracting of digital and tourism services and purchase of goods abroad.

This tax was established at a rate of 30% for most of these operations, with the purpose of discouraging the demand for foreign currency and strengthening international reserves.

Evolution and modifications of the PAIS tax

Since its implementation, the PAIS tax has undergone various modifications:

1. October 2022: The scope of the tax was expanded to include the purchase of luxury goods and personal, cultural and recreational services abroad, maintaining the 30% rate.
2. July 2023: 25% rates were incorporated for certain foreign services, such as maintenance, computer services, insurance and professional advice. In addition, a rate of 7.5% was established for the import of freight goods and services related to exports and imports.
3. December 2023: Javier Milei’s government increased the tax rate for international freight services and imports from 7.5% to 17.5%.
4. September 2024: The previous increase was reversed, returning the rate to 7.5%.

The income generated by the PAIS tax is destined to:

• Programs run by ANSES and PAMI: Financing of social and health benefits.
• Social housing works: Development of housing projects for vulnerable sectors.
• Economic infrastructure works: Investments in infrastructure to boost economic growth.
• Promotion of national tourism: Promotion of tourist activities within the country.

In which areas the PAIS tax will be maintained in December

Minister Luis Caputo confirmed that certain operations will continue to be taxed by the PAIS Tax and will not benefit from the reductions. Among them are:

• Savings dollar and tourist dollarwhich will continue to be taxed at current rates.
• Profits and dividendsin accordance with the Monthly Accounting Information Regime for Foreign Exchange Operations of the Central Bank (code I03).
• Repatriation of non-resident portfolio investmentsgenerated from collections in the country for profits and dividends received since September 1, 2019.
• Subscription in pesos of special bondssuch as the “Bonds for the Reconstruction of a Free Argentina” issued by the BCRA, acquired as payment of profits, dividends or repatriation of portfolio investments.

In this way, while some sectors will experience tax relief, others will continue to bear the impact of this tax until its eventual elimination.