The Argentine Government Takes Economic Measures to Relieve the Impact of Currency Depreciation

We refer to Regulatory Decrees No. 561/2019, No. 566/2019, No. 567/2019, and the General Resolutions from the Argentine Tax Authority No. 4546/2019, No. 4547/2019 and No. 4548/2019, which were recently published in the Official Gazette, and are currently in force.

We describe the main aspects of the Decree regarding the freezing of fuel prices, benefits granted to workers, the extension of credit terms permanent regimes, and VAT exemption of products that make up the family food basket.  

Fuel prices freezing:

This action was made effective through Decree No. 566/2019, which orders the freezing of fuel prices for a 3-month period.

The Decree established a BRENT reference price of 59 USD per barrel, and a reference Exchange rate of ARS 45.19.

In addition, the price of fuel and gasoil commercialized in every sales channel by refining companies and retailers cannot exceed the agreed price as of August 9, 2019, within 90 calendar days after this Decree becomes effective.

The refining companies and retailers must cover, at the price established by the Decree, the total Argentine market demand of liquid fuels, regularly and continuously to all refineries located in the Argentine Republic in accordance with the volumes that are required considering usual market practices.

Agreed benefits for the workers:

In four sections, Decree 561/2019 lists the agreed benefits and instructs the Argentine Tax Authority so that the agency adapts the norms as detailed below:

• Increase on non-taxable income and the special deduction for those who have a public service position, dependent workers and retirees, pensioners and retirees.

The government states that the Argentine Tax Authority must reduce the base calculations of withholdings – by an amount equivalent to 20% of the amounts contemplated in Income Tax Law, like a special deduction and non-taxable income, on:

1. The amounts received by national, provincial, municipal and City of Buenos Aires public service workers;
2. The amounts received by employed workers; and
3. The amounts of retirements, pensions, withdrawals or subsidies originated from personal jobs that have been subject to the payment of the tax, including cooperative society advisors.

This decision translates into a 20% increment of the amounts determined as a special deduction and the amount known as “non-taxable minimum”, which rises from ARS 85,848.99 to ARS 103,018.79 for the 2019 tax year.

To determine the amount to withhold in concept of income tax related to these incomes (except for those related to cooperative society advisors), the Argentine Tax Authority in General Resolution 4546/2019 states the withholding agents must use the table     annexed to this resolution.

The Argentine Tax Authority stipulates that the differences that are in favor of workers will be reintegrated in two equal amounts in September and October 2019, and also states to the withholding agents that the reintegrated balances must be described as “Benefit Decree 561/19” in the salary receipts.

Its application will generate an increase in the numbers of workers who remain outside the income tax scope and a reduction in the tax burden for those workers affected.

• Reduction of advances for income tax

The Decree provides a 50% reduction in the advances that self-employed workers registered under “autónomos” regime must contribute as income tax for the months of October and December of the 2019 tax period.

 

General Resolution 4547/2019 halves the advances that individuals and inheritances must attach in account of income tax.   

• Self-employed workers will get a bonus

For the self-employed registered under “monotributo” regime, the Argentine government provides a bonus for the tax they pay from September 2019, as long as they are up-to-date with their payments from January to August of the current year.  

With this aim, the Decree delegates the Argentine Tax Authority to establish how and when the bonus will be provided.

• Financing of pension contributions of employed workers

With a focus on “strengthening the situation of employed workers who are struggling with  new economic circumstances”, the Argentine government will finance the retirement contribution of employed workers, which will accrue during the months of August and September 2019, at an equivalent sum of ARS 2,000 monthly or at 100% of its value, whichever is less.   

In the case of part-time contracts, this amount must be provided for the time worked, taking into account the normal working day of the activity. In all cases where the work involves a fraction of time that is less than one month, the corresponding proportion should also be carried out.

The same provisions apply to cases where workers must deduct the amounts for their personal worker contributions from remunerations.

The Decree also:

• Restricts the granting of the benefit, exclusively to workers that have a gross monthly remuneration accrued on the month in question up to ARS 60,000.
• Indicates that the expenses demanded by compliance of these provisions will be financed with the contributions that the Argentine Treasury will destiny to the National Social Security Administration, without affecting the provisional system’s resources.
• It instructs the Argentine Tax Authority to issue the necessary regulations for the application of the benefit.
• Invites the provinces, the City of Buenos Aires and the Municipalities to adhere to these provisions by adopting similar decisions in their jurisdictions.

Extension of permanent payment facilities regimes

Under General Resolution 4548/2019, the Argentine Tax Authority enabled the expansion of payment facilities regimes that are available permanently, for regulating the tax, customs and social security obligations.

The resolution details that for SMEs the number of facility plans to which they can access will be increased to 10, and for the rest of the taxpayers, it will be increased to 3. The annex joins the resolution includes details of the interest rates to be applied to each case, with a maximum rate of 3% to be applied to SMEs, and self-employed  taxpayers.

Is also suspended the “Risk Profile System” until December 31, 2019,, allowing taxpayers to get the maximum amount of plans and at the lowest available tax rate regardless of their tax risk profile.   

VAT deduction related to products from the family food basket:

It was established that there will be a tax break until December 31, of 2019. The products that this benefit will affect are those that comprise the family food basket, such as: bread, milk, sunflower oil, dried pasta, rice, wheat flour, polenta, breadcrumbs, yerba mate, mate tea, tea, yoghurt, sugar and canned fruit, vegetables and beans.

The aim of Decree Nº 567/2019 is to guarantee the normal and usual supply of the domestic market, on account of the serious problems that lack of supply of any of these products could cause.