The tax on Gross Income was the one that had the most impact on the prices of products and services. Buenos Aires is the province with the highest tax burdenfollowed by CABA. Three out of 10 companies decided to restrict their operations in some provinces. And, meanwhile, greater fiscal pressure is expected with a tax scheme that does not help reduce the informality of the economy and with widespread skepticism as to whether the moratoriums can be resumed.
But there is a good one: most companies plan to maintain their investments in the country, although there are still very few who plan to increase them.
These are, broadly speaking, the main results of the 2022 version of the annual “Taxes in Argentina” survey that KPMG conducts among financial managers (CFOs) and tax specialists from medium and large front-line companies throughout the country, whose investment decisions tend to be significant in growth, employment and economic formalization. The sample was made in January and was answered by 70 executives.
The tax on Gross Income was the one that most impacted the prices of products and services
“From the responses that arise year after year, it can be deduced that the success of a tax reform that focuses on productivity and sustainable development without aiming at a readjustment of the Gross Income Tax and strongly moderating the overlapping of income tax regimes is highly unlikely. provincial collections,” said Fernando Quiroga Lafargue, Corporate Tax partner of KPMG in Argentina and responsible for the survey.
Point by point results
-Gross Income: 65.67% said that the Gross Income Tax is the one that had the most impact last year on the prices of products and/or services of companies. The percentage remains unchanged with respect to the 2020 survey.
-Investments: 92.54% of those who responded to the survey stated that the tax framework affected their investment plans, either because it directly led them to disinvest (46.27%) or not make new investment decisions (46.27%). ). Barely 7.46% of the sample stated that they had developed an expansion plan in terms of investment in 2021.
-Tax burden of the Provinces: the Province of Buenos Aires was designated as the province with the highest tax burden, followed by the City of Buenos Aires, Córdoba, Tucumán and Misiones.
-Companies that avoid selling in certain jurisdictions: although 7 out of 10 experts stated that they had not restricted sales operations of goods/services in any province, a significant 30% acknowledged that they had made that decision due to the high tax pressure of some jurisdictions. Tucumán, Misiones and Salta lead the ranking of provinces whose fiscal pressure ends up affecting a more restricted supply of goods and services.
-Moratorium: 52% considered that the application of broad tax moratoriums at the national level would not be successful in terms of collection. 50.75% maintained that they would be at the provincial level in those that provide benefits of deductions, interest and fines.
Most companies plan to keep their investments in the country
-Balances: 83.58% said they had balances in favor of provincial taxes for between $10 million and $50 million. The generalization of this type of financial immobilization for companies is normally very damaging. The multiplicity of provincial collection regimes on transactions, exacerbated by the regimes that collect on bank accreditations, constitutes one of the main problems of the Argentine tax regime.
-Incentives: 77.61% affirmed that national and provincial incentive tax measures are neither effective nor sufficient for the development of industrial activity; 85.07%, which are not for financial inclusion, and 73.13%, which are not for export activity. Yes, the view on the incentives for Knowledge Industry was mostly positive (56.72%).
Outlook for 2022
-Tax pressure: 81% anticipate greater tax pressure in 2022. The expected worsening of tax pressure for 2022, added to the high percentage of respondents who indicated that already in 2021, tax pressure had led them to a disinvestment situation is, for KPMG experts, a warning signal for the economic authorities.
-Investments: 75.24% ratified their intention to maintain investment in the country (they had been 56.45% last year). Those who say they will reduce their investment in the country for the coming year fell from 32.26% in 2021 to 18.18% this year. But, on the other hand, the proportion of those who express their decision to increase investment in Argentina is still very low.
-Informality: 93.94% evaluated that the current tax system does not help reduce the informality of the economy, which is in line with what previous surveys showed.
-Investments in the province: 98.49% do not believe that the provinces have a greater interest in attracting productive investments to their territories with tax incentives. Those who notice some effort point to Córdoba as the jurisdiction that offers some incentive
-Tax Rebate: 80.30% believe that in 2022 the provincial tax rebate commitments provided for in the Fiscal Consensus signed at the end of 2017 will not be resumed.
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