A government commission yesterday started to debate a tax regime bill that would allow Argentine residents who freelance for companies abroad to earn up to US$30,000 a year without converting them to pesos.
If approved, the bill would substantially increase the amount of money that contractors and freelancers working for foreign companies can bring into Argentina without having to convert the money to pesos at the official exchange rate. These workers are considered under Argentine law to be exporting services.
Drafted by the Economy Ministry, the tech unified tax (monotributo tech, or mono tech) was especially designed for software industry workers and esport players, although anyone that provides services to overseas companies from Argentina would be able to enter the regime, as long as they invoiced no more than US$30,000 to overseas companies in the year before signing up.
The bill aims to more fully incorporate thousands of knowledge economy freelancers into Argentina’s formal economy. Until June 2022, self-employed people who work for companies abroad were required by law to bring their income to Argentina and convert their earnings to pesos at the official exchange rate. Since the informal dollar has been worth up to twice as much as the official in recent years, this prompted many to bring their money to Argentina
A policy on June 2 allowed freelancers – who are deemed service exporters by the government – to earn up to US$12,000 a year in Argentine bank accounts without having to convert them to pesos. Workers have to sell anything beyond that amount to pesos at the official exchange rate, which gives them roughly half as many pesos as the parallel rates.
The mono tech, whose drafting was consulted with the tech sector, aims to further prevent freelancers from exchanging their payments through cryptocurrencies or informal exchange houses, known as “cuevas”. The government expects some extra US$2 billion to enter the country should the bill pass, Knowledge Industry Secretary Ariel Sujarchuk has said.
According to a six-page draft of the bill viewed by the Herald, the Central Bank will create a special foreign currency account for the adherents.
“It is part of a series of government strategies, through the Economy Ministry, to generate jobs and for the entry of foreign currency into the country,” said Knowledge Industry Financing and Regulation Undersecretary, Eduardo Kutner, during the first discussion about the bill, which took place yesterday in the Chamber of Deputies’ Budget and Treasury Commission. “Our goal is to incorporate as many professionals as possible into the formal market,” he added in the deputy Carlos Heller-headed commission.
The Public Income Subsecretary, Claudia Balestrini, highlighted the esports industry as a “very attractive and incipient universe that was not taken into account, and a very good opportunity and incentive for young people to incorporate themselves into the formal economy.” José Bianchi said the “formalization” the mono tech implies for the sector will significantly raise value-added tax and income tax collection.
In that vein, according to the draft, the monthly installments for Mono-Tech members will include those taxes, as well as healthcare and pension payments. Small Tech Taxpayers who earn up to US$10,000 a year will pay the monthly installment D-rank unified taxpayers pay (AR$9,245.06 at the time of writing). Those who earn up to US$20,000 a year, will be charged as F-rank unified taxpayers (AR$15,712.40), and workers who export services annually for up to US$30,000 will pay as much as a H-rank unified taxpayer (AR$31,347.16).
The “Mono-Tech” will be compatible with other tax regimes such as the unified tax (monotributo) or registered tax persons (responsable inscripto), but not with the Simplified Regime for Small Taxpayers (régimen para pequeños contribuyentes).
The Economy Ministry-backed project is one of the 27 initiatives the government aims to address in the extraordinary sessions period, which will take place up to February 28. The opposition is boycotting the sessions due to a more controversial bill proposed by the government, the impeachment of the Supreme Court of Justice.
Sujarchuk called the opposition to vote for the project. “The State must give a clear and simple tool for people to work for overseas companies, bill for their services and not earn their money ‘under the counter’,” he said. “Why wouldn’t the opposition approve something that eases the life of hundreds of workers and allows the entry of new dollars to Argentina?”.