Argentine Companies Invest 312 Hours Per Year In Paying Taxes

Photo Natalia Motyl
Natalia Motyl

Bachelor of Economics (UBA). Economic Analyst of Libertad y Progreso.

EL ARGENTINO – Currently, in our country, most companies are facing serious liquidity problems. According to the SME Observatory Foundation (FOP), between 6% and 8% of companies already warn that they will be forced to close, while the rest, in the midst of a quarantine that has paralyzed business activity, still does not have a perspective clear in the future.

There should be a balance that weighs the taxpayers and sectors that are better able to pay in the current context.

However, the confinement measures carried out by the Government do nothing but deepen the problems that the business sector has been enduring, for more than a decade now that Argentine companies have to face excessive regulations and taxes.

Today in Argentina, regulations prevent investments in our country from being generated or productivity from increasing. The number of inefficient administrative authorities in triplicate in each jurisdiction only causes employers to waste money, time, and energy that could be used for research and development, technological advancements, and / or capital incorporation.

Unfortunately, regulations only force entrepreneurs to incur increasing costs; and the rest of the Argentines to live in a country with higher unemployment and an increasingly lower level and quality of life.

Another factor that hinders business activity is excessive taxes. Taxes have destroyed the country’s wealth for several years. This transfer of resources from the productive sector to the public sector does nothing more than squander investment, employment and innovation. This means that Argentines cannot access either cheaper or better quality products or higher real wages. This occurs without any evidence that this loss generated in the private sector is offset by an additional unit of resources in the public sector.

As we can see in the graph, according to World Bank data, the total tax rate that Argentine companies must pay as a percentage of their earnings is double the average for the Latin American region and three times more than for countries like the United States or the average of high-income countries.

Argentine companies pay 106% in taxes on their earnings. That is, of every $ 100 an entrepreneur earns, $ 106 must pay the State. Any Argentine businessman not only does not make a profit, but must pay taxes even with his initial investment.

Furthermore, it is estimated that of USS12,600,000 invoiced annually by a medium-sized company of 60 employees, it must pay the State $ 2,544,000; Not only does he not win, but he must pay him $ 144,000 more. While, just by crossing the river, in Uruguay they would be paying about 42% of their profit and, crossing the mountain range, in Chile they would not exceed 34%.

In addition, another fact to keep in mind, according to the World Bank, Argentine companies lose 312 hours a year in paying taxes, when in Chile they amount to 296 hours a year and in the United States only 175 hours.

In other words, the country spends twice as much time paying taxes in any developed country. Taxes are high and complicated. We have around 165 total taxes and only 11 of them take care of collecting 90% of the total collection. Our tax system is completely corrosive and unsustainable.

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