LinkedIn – According to a report by IPA (Argentine Industrial SME’s) determined that Argentina is the country in the world with the highest tax pressure on industrial SMEs. With 106% of cargo via taxes, our country surpassed Bolivia (84%), Equatorial Guinea (79%), Central African Republic (73%) and Venezuela (73%), Afghanistan (71%) and Colombia (71%), which are among the top 10.
The IPA report noted that the total tax pressure on the percentage of net profit of an Argentine SME is 106.3%, if the different rates and contributions that an industrial CEO must face to make a commercial agreement are taken into account, and which includes – among the heaviest charges – Gross Income, Employer Contributions, Check Tax and Income Tax, among others.
The total tax pressure of 106.3%, more than double the average taxes that countries apply according to the OECD measurement (40.4%). The majority of Mercosur countries, such as Uruguay, Peru, Paraguay and Chile are below the average tax line, which constitutes a great competitive damage for Argentine products where historically they found favorable markets.
This scenario clearly explains the growth of informality in the economy that has already generated more than 4 million workers in illegality, the collapse of manufacturing exports due to low competitiveness that currently does not exceed 5% of its exportable capacity, and the closing of companies during the last decades. It is a vicious circle, which caused the State not to collect genuinely and cannot finance the commitments it has to face with resources from production.
By Aldo Leporati
Partner & Managing Director Porter Novelli Argentina Corporate Reputation, Issues & Crisis Management