Amid tough negotiations with the International Monetary Fund and a sharp drop in international reserves, the Argentine government has implemented new taxes for imports of goods and services from Monday onwards. It also granted a higher exchange rate for some agricultural exports, although soybeans are excluded.
The measures were published in the Official Bulletin on Monday morning.
From Monday, importers will have to pay:
- Services: 25% extra tax. Anyone contracting a service from outside Argentina will have to add 25% tax to the official exchange rate. On Friday, the official exchange rate was AR$249.50 per dollar. From Monday, an importer of services will have to pay an extra 25%, which raises the exchange rate to AR$311.87. Some services are exempt, including freight (which is taxed at 7.5%), health and education (which are exempt) and performances by international artists (which are already taxed at 30%).
- Goods: 7.5% extra tax. A company importing goods will have to add 7.5% tax to the official exchange rate. On Friday, the official exchange rate was AR$249.50 per dollar. From Monday an importer will have to pay an extra 7.5%, which raises the exchange rate to AR$268.21. Some goods are exempt, including fuels and lubricants, and products of the basic food basket. This tax does not apply to importers who pay with their own dollars, rather than getting the U.S. currency from the central bank.
The 7.5% tax will not apply to goods that are imported for use in production chains and then exported in finished products. Examples include soybeans imported to produce oil and batteries used in vehicles. To access this benefit, companies must first pay for the import — using either their own dollars or financing from the supplier — and then collect the export income.
For exports, the government will grant a new agricultural dollar from Monday, July 24 until August 31, which will apply to regional economy products and grains, including corn but excluding soybeans. The new exchange rate will be $340, 36% above the value currently in force before tax retentions applied to each product (which can reach up to 35% of the exported value).
Regional economies in Argentina include producers of traditional local products such as yerba mate, wines, citrus, rice, tea and wood.
According to official estimates, these measures could mean an export liquidation of US$2 billion and tax revenues of around AR$1.3 bn.
This is the fifth time the government has implemented an agricultural dollar exchange rate. The first three included soybeans and the fourth excluded soybeans.
The government also increased the value of the dollar for people who save in hard currency in Argentina.
The measures have several objectives:
- they seek to improve the terms of trade, by making imports more expensive in order to avoid overstocking, while stimulating exports thanks to an improvement in the exchange rate
- to boost international reserve accumulation
- avoid a generalized devaluation by making access to the dollar more expensive
- to use scarce international reserves for production and discourage saving in dollars
On Sunday, the IMF said on social media that it had agreed on “the central objectives and parameters that will be the basis for a Staff Level Agreement”.
“It is expected to be finalized in the coming days and then move toward a review of Argentina’s program,” the IMF said.
Official sources told the Herald that they expected the delayed agreement to be announced by the middle of this week.
Economy Minister Sergio Massa said in an interview on news channel C5N that he expects the IMF board to approve the agreement in August. He said the agreement involves bringing forward the program’s disbursements which will allow the country to make the payments it owes to the financial institution.
Massa has also said that the next discussions with the IMF will be in November, which would avoid negotiations during the electoral period.