1% of companies will pay an advance of up to 124% this year

According to estimates by the Argentine Institute of Fiscal Analysis (IARAF), the advance will generate an extra $250,000 million, but of that $150,000 million will go to the provinces as co-participation.

Although the organization led by Carlos Castagneto makes reference in resolution 5248 published in the Official Gazette, to the fact that there are local companies that benefited from the increase in the price of energy and commodities due to the war in Eastern Europe, the The measure is not directed towards specific firms such as oil or agricultural companies. The only parameter it sets is the taxable base of the Tax.

The companies that will enter within 2021 will be those that close their exercises between now and the end of the year and by 2022, those that close between January and July. The Resolution excludes companies that have obtained a certificate of exemption from income tax, in accordance with General Resolution (AFIP) 2681.

According to what was reported by the AFIP se deals with 1,911 companies that will be covered by the extraordinary advance payment, which, strictly speaking, will become a kind of loan to the public sector at a zero rate.

This is because companies normally pay an advance equivalent to 25% of the tax base of the previous year and another 9 installments of 8.33%. This integrates 100%. After that, the majority in June of the following year, pay the balance of the Income Tax based on their result less what they already advanced, withholdings and other deductions. This year, by adding an extraordinary advance payment of 15% or 25% as appropriate, companies will be advancing between 114% and 124% with respect to its calculation basis. Companies that have a determined tax base greater than zero will pay an advance of 25%. On the other hand, those whose base is zero (this can occur in the case of a company that applies deductions for losses from previous years”), will pay 15%.

The result of this greater contribution from companies, as anticipated by Minister Sergio Massa, sIt will be applied to finance the bonus that will be given to retirees to offset the effect of inflation on assets. In other words, it is a loan to the public sector at a zero or negative rate, because the advances, although they are computed for the tax determined for the fiscal year, are not subject to adjustments either for interest rate or for inflation. When the company pays the tax in June of the following year, it will have spent more than half a year in an inflationary context with annual rates of 90%.

Sebastián Domínguez, a partner at SDC tax advisors, warned that “companies will be forced to enter advances that they had not planned, changing the rules of the game and modifying the scenario that, in itself, is already complex”. “This can cause those companies that do not have financial availability to increase the prices of their products and services or have to go into debt assuming financial costs that can also be transferred to prices, among other options,” he explained.

Some of this warned the Argentine Industrial Union (UIA) last week after a meeting of the plant’s Board of Directors attended by the Secretary of Industry and Productive Development, José Ignacio Mendiguren. The UIA indicated that the measure “will affect issues such as working capital, investment decisions and job creation -in a restrictive context for financing and with rising interest rates”-. For the manufacturing plant, the cash flows of the companies are already planned, which would “generate complications in the payment chains,” according to the industrialists.

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