What should have changed from the extraordinary advance on personal income tax?

The recent decision of the National Government, concretized through the General Resolution AFIP 5.842, to demand an extraordinary advance on income tax about 1,900 companiesimplies in fact a substantial change in settlement and payment of said tax, which it can only hold the Congress of the Nation.

To measure it does not consider the real economic capacity to contribute taxpayers and may determine, with respect to some of them, violation of your property right. Matter that can give rise to the beginning of Legal actions declare the general resolution unconstitutional, and recognize a new one case of confiscation in relation to income tax.

Beyond the reasonableness or otherwise of the measure adopted, given the current financial environment of the country, the claim of the tax authority to request the registration of an additional deposit equal to 25% or 15% of the previous year’s taxadded to the obligation to cancel the other advances provided for by current legislation, it will result in some cases than the effective tax rate earnings for the year far exceeds the maximum rate of 35% that the law establishes.

The basis expressed in the standard to justify the initiative, that is, that you make an advance and an extraordinary payment taxpayers who have benefited from itdirectly or indirectly, with the general increase in international food and energy prices (resulting from the Russia-Ukraine conflict) It has no correlative, nor any connection, to the universe of the companies reached.

If we take into account the billing scale currently in effect for medium-sized enterprises, 2nd tranche (classified by SEPYME) reaching $ 7,046,000,000, taxpayers getting only 5% yield before income tax will be achieved for the new advance, regardless of the activity they carry out.

One of the most questionable situations not covered by AFIP when requesting down payment is the impact on taxpayers who have tax losses– Losses – from previous years -, which cannot make use of the advance reduction mechanism, renouncing an adequate measurement of the real contributory capacity of taxpayers.

It could also happen that the person who records the down payment when submitting his affidavit for the year, calculating the losses at that time, don’t throw taxes to payeven before calculating the special advance paid.

Failure to consider the cases indicated is also contradictory with the work of the Revenue Agency. In the meantime, taxpayers who in the 2021 fiscal year fully computed in their tax return the loss deriving from the application of the adjustment for tax inflation – in most cases -, were able to request the partial or total reduction of the advances, situation unjustifiably prohibited with respect to this special payment.

Undoubtedly, we are faced with another measure deriving from the need to increase the collection, but which does not take into account the infringement of rights taxpayers: the prohibition to use freely available favor balances as a means of payment for this new obligation, through the compensation institution, when due to the proliferation of current withholding and collection regimes, most companies have a more than significant stock of tax credits of this nature.

The same happens for those who have a no withholding tax certificate. What is the reasonableness of requiring them to register the down payment when it is clear that it will be a new credit why will it surely exceed the tax obligation?

Currently, the decision of the tax authority not yet operationaland from AmCham Argentina we believe it is the ideal time to which is revised its purpose and the relevant settings along the right roads.

It is essential to put an end to the uncertainty of the nearly 2,000 companies affected. You can understand that you want to increase your collection, but at what costusing inappropriate mechanisms or infringing property rights?

* Ariadna Artopoulos is a partner of the Tax Department of BOMCHIL and Roberto Van der Zee is a partner of the Tax Department of RSM Argentina and both are authorities of the Tax and Legal Committee of AmCham Argentina.