A few days before the end of 2023, in the automotive terminals grouped in Association of Automobile Manufacturers (ADEFA) provisional numbers show that production will exceed 600,000 units for the first time since 2014. The final numbers are not yet available, but it is also possible that this could happen They exceed 617,000 vehicles produced in that period.
55% of that production, equivalent to more than 300,000 vehiclesthey were exported. The exclusive market for Argentine vehicles continues to be so Brazil, where they enter at zero duties thanks to the Mercosur agreement. But they also arrived, in thousands of units, to other regional destinations such as Colombia, Peru, Mexico, Chile and Ecuador.
An equally important fact is that many of these vehicles are pick upwith an export value of approximately $25,000, equivalent to two small cars.
Another amazing fact is that they manage to compete despite their obviousness lack of competitiveness: In international trade we usually speak of “FOB price” (for “free on board”) to refer to duty-free goods. This is precisely what doesn’t happen with Argentine vehicles which, when shipped abroad, entail a tax burden accumulated during the production process Gross Income, NATIONAL Tax, Check Tax and various municipal taxes Safety and hygiene.
According to a study by ADEFA, this indirect accumulation of taxes top up the export price by 20%against a zero rate for vehicles exported from Mexico or one 3% rate. for those who are shipped departing from Brazil.
One in two of these local vehicles also pays a 5% tax rate. withholding taxes on exportsa tax that the Macri government abolished in January 2016 and so on He was paid again just two years laterafter the May 2018 devaluation.
Alberto Fernández’s government has not eliminated withholding taxes on the export of vehicles, but the darkened: the concept of “zero rate” applied in the collection of withholding taxes for “incremental” exports exceeding 137,000 vehicles exported in 2020.
With this policy, the export blockade disappeared liquefaction year after year, as local production increased and also foreign sales.
Today it is the nominal rate of 5% for vehicles less than 2.5% if the sector is measured as a whole, by total exports it would be approximately 340,000 units in 2023: 137,000 who pay 5% and more than 200,000 “incrementals” who will end up exporting at zero interest.
“Even with attenuated export duties, the tax burden of an Argentine vehicle upon export it is 20%, compared to 3% for a Brazilian vehicle“, said a leading industry executive, who participated in the study carried out by ADEFA.
Within the entity they have been on alert since Minister Luis Caputo announced an increase in withholding taxes on exports 5% to 15%.
The announcement was confirmed this Wednesday with the draft Omnibus Law sent by the president Javier Milei to Congress: the article 201 of the megaproject export duties rise to 15% for all tariff positions of Common nomenclature of Mercosur who today pay a lower rate. For automotive companies, this is the ratification of Minister Caputo’s announcement.
“It divides us in half” one of the terminal managers said without hesitation. “It makes us competitive and we can lose markets at the hands of competitors from other origins or other branches“.
The Government bill increases taxes and, moreover, reserves space in its text for confidentiality which is contemplated in article 207. According to this article, Congress authorizes the Executive Branch to “stimulate (…) the development of certain sectors“(does not specify which ones) and allows the rate of export duties to be reduced”down to zero percent”.
They have already asked ADEFA for a meeting with the new Secretary of Trade and Industry, Pablo Lavigneto explain the problems of the sector, which during Sergio Massa’s mandate at the Ministry of Economy accumulated a debt of more than 5 billion dollars which they could not purchase from the Central Bank between March 2022 and the end of this year.
But a non-minor point of the meeting they asked for includes the statement that Don’t burden them even more the export of vehicles.
“Let’s see if we fall within that article which provides for zero withholding taxes. We’ll have to see if we make it happen“added another sector manager.
Source: Clarin
