As part of the concessions that Javier Milei made to opposition governors and legislators to try to get the Argentinian Freedom Basis Law passed, A number of tax breaks for small businesses have been removed that accept payments with virtual wallets and cards.
The Argentine Fintech Chamber, which brings together companies in the sector, presented a document on Tuesday in which it expresses its concern about this decision and also warns that, in some provinces, Taxes associated with sales in small businesses can account for 10% of the operation.
In chapter V of the original text of the Omnibus Law there was an article that established “the relief of tax withholdings on electronic collections by small taxpayers”. He defined them as those activities where the monthly billing does not exceed 10,000 UVASa value that today represents approximately $5.5 million.
This article has been deleted from the final text that the Government intends to discuss in Congress this Wednesday. “Unfortunately, article 182 is part of the Chapter of fiscal measures, the elimination of which will be discussed in the Chamber of Deputies”, they explained to the Chamber.
“This measure is fundamental for the digitalisation of the economy and, consequently, the reduction of the use of cash”, they underlined, arguing. “Currently, the tax burden placed on small and medium-sized businesses is one of the main obstacles to the digitalisation of payments.”
The thesis of companies in the sector is that cash wins given that there are many merchants They do not accept digital payments to avoid excesses in the tax burden “which in some provinces can exceed 10% of each sale”.
The Chamber’s statement focuses on what greater adoption of digital payment methods means for the economy. “The digitalisation of payments does not just mean greater formalization of the economy, but also an improvement in tax collection and easier access to credit for small taxpayers. By digitizing their transactions, small and medium-sized businesses generate a greater volume of financial information. This generates more and better credit, a necessary condition for the growth of any economy,” they noted.
“Digital money management offers transparency, traceability and safety of operations, unlike cash management, which exposes traders and consumers to the constant risk of theft and other associated costs,” underlined the group which brings together companies such as the giant Mercado Pago, or Ualá, which is also part of Adeba, the banking chamber , because it has the Uilo banking license.
“We ask the authorities to do so reconsider this measure and promote policies that encourage financial inclusion and the formalization of the economy, ensuring a favorable environment for the development of small taxpayers and the sustainable growth of the country”, closes the document.
What did the original article say?
In chapter V of the bill presented on December 27, article 213 provided for the relief of tax withholdings on electronic collections by small taxpayers.
Furthermore, the article required that “entities administering debit, credit, purchase and similar cards, groupers, aggregators and other processors of electronic means of payment”, while financial institutions provide monthly reports” on collections with the payment methods managed by them”.
Specifically, the project established: “The entities that manage debit, credit, purchase and similar cards, groupers, aggregators and other processors of electronic means of payment, for payments made through the systems managed by them, processed or managed; and financial institutions, for the payments they make by way of settlement corresponding to payments made through the systems administered, processed or managed by the latter, can only make tax withholdings, when so provided by the national tax authorities or by the competent premises, provided that the amounts processed exceed the equivalent of 10,000 units of purchase value per month.”
There is currently a tangle of withholding taxes that various players in the financial system charge for managing digital payments. For example, from 2021 the Central Bank has established that the Credit card transactions are taxed at 1.8% of the sale amount and debit cards at 0.8% of that amount.
Source: Clarin
