Unexpected income taxes: the keys to the project and to whom it arrives

President Alberto Fernández and Economy Minister Martín Guzmán will present the bill this afternoon in charge a special “unexpected income” tax“who have obtained a group of companies for the price shock caused by the war from Russia to Ukraine.

The first time there was talk of imposing an unexpected income tax, not the one that occurs after an investment, but that appears as in this case after a certain event that triggers it, was a month and a half ago. To put it into words was the Minister of Economy, it was during a television interview.

The idea has re-emerged from the hand of the official but this type of initiative is not new, something similar had already been implemented in the times of Ricardo Alfonsín and Fernando de la Rúa.

the keys

• What will the tax be and who will it affect?

The tax aims at “extraordinary” or “unexpected” profits, those that are not a direct consequence of the investment but respond – in this case – to the effect of the international price shock which caused the war between Russia and Ukraine.

The project seeks to capture this extraordinary income from large companies, which bill over $ 1 billionand redirect these funds to vulnerable sectors. “Actual net taxable income is to be significantly increased in 2022 with regard to 2021 ″Guzmán underlined by presenting the initiative that will finally see the light this Monday. The presentation will take place at the Casas Rosada with the presentation of Alberto Fernández and Guzmán himself.

“Companies that have taxable profits in excess of $ 1,000 million, which is a very small portion of the entire company network,” the head of the Treasury said at the time. In this way, the provision would concern only a very small part of companies: in 2021, 3.2% of the total number of companies would have had to pay for it.

• How Much Should Be Collected?

With this tax, the government seeks to raise approximately $ 200,000 million, an amount approaching the $ 206,000 million that the state raised for the payment of the ANSeS Income Enhancement for informal workers, private home workers, pensioners and single-tax payers.

already in May the first installment of the $ 18,000 bonus has been paid for informal workers e $ 12,000 for retirees and retirees who charge up to two minimums.

• IMF approval

The proposal received the approval of the technicians of the International Monetary Fund (IMF). “To reduce the burden on public finances, it could be provide for a temporary increase in taxes on excess benefits. This would help recover some of the transfers to companies that do not need them “, the multilateral body said, adding:” In cases where the definition of objectives is difficult and fiscal space is limited, countries may need to consider revenue-raising measures to finance various priorities“.

• Incentive to reinvest

Martín Guzmán also assured him a parameter will be set to reduce the rate in case of unexpected income be channeled towards reinvestment. The “carrot”, in this case, is making a tax discount for those who reinvest those extra earnings.

• Local and international context

In Argentina there is the experience of a tax that has been applied only once and whose aim was to tax high incomes. This tax was established in 1999 by Law 25.329 and it was extraordinary, it applied only once, human persons and undivided goods had to pay the tax. Legal persons were not subject to the tax, that is, they were not required to pay it. In order to benefit from the tax, the taxable capacity of individuals and of the assets undivided in the fiscal years 1998 and 1999 in the tax income was taken into account.

For specialists, Argentina repeats formulas, raising taxes is one of those resources that local governments impose from time to time to moderate the effects of an economy in crisis. However, in other parts of the world they use the opposite formula: taxes are lowered to offset the effects of rising prices. This is currently the case in European countries such as Poland, Germany and Ireland.

In 2021 the finance ministers of the G7 (Canada, the United States, Japan, France, Germany, Italy and the United Kingdom) reached an agreement to lay the foundations for a new international tax system, establishing a minimum global tax of 15% for large multinationals.

• What do employers say?

The business chambers reject the initiative which aims to collect an unexpected rent. “Argentina must return to the path of sustainable economic and social development. This is why it is essential to create the conditions so that small, medium and large enterprises can make investments “. “The creation of new taxes goes in the opposite direction. In Argentina, 165 taxes are already in place and the tax burden on the formal sector of the economy is very high and has grown strongly over the past 20 years, easily exceeding the regional average, ”said the Argentine Business Association (AEA).

YN