A couple of weeks ago a businessman from the toy industry approached me and asked: Could it be that we are funding supermarkets? Pay gross income receipts when we haven’t cashed them yet?, I said -yes, dear friend, it’s true-. Then he replied: but how can it be that the government promotes or allows that a small business finances a corporation? “Fiscal voracity,” I replied.
When the SME sector and entrepreneurs talk about their problems, they usually highlight three issues.
TO) The tax system
B) labor law
C) The almost impossible access to creditdue to the non-existence of alternatives or their high cost
Since these are the axes of the problem that threatens the livelihood of SMEs, there is an issue that calls attention beyond the factors such as excessive taxationTHE system complexity and the job application to comply with tax information requirements or regimes, and that issue is the collection of taxes without a law to support them.
some might ask How can there be a tax without law? It’s easy in Argentina. I establish a collection regime (withholdings and collections at the source), which implies the advance of taxes, but the overcoming of the tax obligation for each month. In other words, The Treasury plans a collection regime, parallel to the affidavitwhich implies in financial terms an income much higher than the tax that each taxpayer must pay.
As a result of these regimes, taxpayers lose resources to the state, or the SME, complicated as it is in accessing credit, starts lending money to provincial states at 0% rate. While there are measures to try to mitigate the effects of this situation, such as the request for rate fairness, or the restitution, they are required when the damage has already been done.
In the first case, hopefully you get a reduction in future withholdings or levies. In the second case, at the time of the reimbursement request, many provinces undergo a painful and slow inspection process, while inflation eats up the favorable balance, which often represents the only profit and savings recorded by the company.
Given this context, where we suffer one of the worst taxes in the world (Gross Income) which is taxed at all stages of the business, generating inflation, has an impact on billing and which, when measured against profit, it is a real tax on profits and sometimes on losses -since it takes only income as a basis-, the treasury of the province of buenos Aires aggravates the damage by punishing the SMEs ironically forcing him to finance large companies.
Within the general system of perceptions of the province of Buenos Aires, there are two alternatives to enter the provincial coffers: one of these is to enter the perceptions according to the criterion of what is received, with which only what is received is is entered. cobra. The other is to enter the aforesaid receipts as accrued, i.e. directly the amount that appears in the invoices for the month received or not.
Currently the PMI does not have abundant administrative staff and the necessary analysis or system to enter the perception of Buenos Aires it often results in choosing the system that is easiest to managei.e. accrued, all the invoiced receipts are entered into the treasury in a single monthly expiry instead of the collection system which consists of two installments and involves the carrying out of a complex survey of the collections.
This system, although it reduces the amount of analysis carried out by the administration, in most cases implies the payment of the tax before receiving payment from the customer. This generates accordingly financial loss to the collection agent, which is accentuated when the taxpayer pays the invoice in 30, 60 or 90 days. Maybe someone can suggest that the credit bill can be assigned, but this implies a reduction in the amount to be received which aggravates the financial situation depending on the rate reached.
In case of choosing to pay only what has been received, as permitted by law, the matter becomes more complicated, given that it is often cashed with checks with a 30, 60 or 90 day validitybut for the provincial rules they imply the perception (i.e. having cashed) when in reality I only have a check, which means that the pecuniary and economic damage will be similar to those who choose the accrued option, or perhaps worse because the income is bi-weekly .
It is curious to note that many times the province proposes or offers credit instruments for SMEs, but it would be simpler to stop these schemes which imply payment when I have sold and still do not collect, allowing my client with greater financial capacity to pay his own taxman with a perception that I have not yet paid, at the cost of the sacrifice of a SME.
This case reflects how incorrect legislation, which also determines the existence of fatal balances in favour, and generates the transfer of financial capacity of small and medium-sized taxpayers to large companies, which without paying the bill take charge of their own tax to be paid, the perception Obtained from its supplier who has not yet received a penny for its sale, generating a transfer of resources from small to large, endorsed by the provincial state, which conceives itself as popular and pro-industrial SMEs.
These regimes are of ancient data, in the province of Buenos Aires, they were established in 2004 by regulatory resolution “B” n. 1, the resource collected sources has since gone viral among the provincial tax administrations, and in Santiago Montoya is undoubtedly to blame, who generated this scourge “inverted tax ratio”.
In this “inverted tax relationship”, the taxpayer is the one who constantly owes ask the tax office to return your money, which he stole from him with excessive collection.
The fiscal voracity, found great facilitations from the collection through withholdings and perception systems – in anticipation of the expiry of the affidavits – which has generated the scourge of “balance in favor of the taxpayer” almost unrecoverable and comparable to a higher tax rate, or to a debenture loan, themes that will be developed on another occasion.
It is clear that the context of SMEs is very complicated and that those who govern us have not yet managed to understand its economic dynamics, suffering serious shortcomings in terms of technical and logical analysis of the context of SMEs, whoever takes over the reins of government in the future should completely overhaul our tax system, reformulating the taxes collected by the provinces and banning or minimizing provincial “withholding systems”.
Unfortunately for the provincial politician, we see no future other than austerity, sweeping tax reform and the phasing out of tax collection schemes at source, but it would be important to correct the “mamarrachos” like making the weak assist the strong, when that fighting day per day to survive in an inflationary environment, without credit and under a suffocating tax burden.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.