Even with Congress almost paralyzed, the tech unified tax (“monotributo tech”) project has been passed in the lower house and has a majority opinion issued by the Senate, and the government is betting on transforming it into law.
If it goes ahead, workers who offer services abroad will be able to declare their activity and receive up to US$30,000 per year straight into their bank accounts, without having to convert it into pesos at the official exchange rate. However, the project will have to overcome the objections of business chambers, who are lobbying against it.
Last Thursday, Argencon, the association that gathers top knowledge economy companies such as Mercado Libre and Globant, organized a cocktail reception at the Sheraton hotel to celebrate their first decade. Guests included Juan Manuel Cheppi, the current Economy Ministry’s Knowledge Economy Secretary. Sources say business leaders and executives “regretted” the progress of the project, which was drafted during Cheppi’s predecessor Ariel Sujarchuk’s tenure.
When the tech unified tax was passed in the lower house, representative Itaí Hagman of the ruling Frente de Todos coalition stated that the owner of Mercado Libre straight-out lobbied against it. “Despite a boycott from [Mercado Libre founder and CEO] Marcos Galperin and [opposition coalition] Juntos por el Cambio, we’ve secured approval,” Hagman posted on his Twitter account. Representatives from JxC, who had publicly supported the project before, ended up either voting against it or abstaining.
Although chambers like Argencon’s bottomline plan is to stop the bill, they also believe a middle ground can be reached. This could come in the form of a law that applies to some liberal professions, such as journalists or gamers working for foreign clients, but not for people linked to the knowledge economy, like programmers.
The Software Industry Chamber (CESSI) also came out strongly against the tech unified tax project. In a statement, they said the tech unified tax would result in “increasing precariousness for contractors”, arguing that people who work for foreign clients, rather than local companies, are selling their services and do not have formal employment contracts. This means they lack benefits such as a 13th salary (aguinaldo), paid vacations, healthcare, social security, and maternity leave.
CESSI also argues that the tech unified tax will result in a “reduction of public income”, since they estimate that it is the only fiscal contribution those workers will pay, and it comes to substantially less than the taxes companies pay for having full-time employees. Another issue they raise is that it will cause “a drop in local production and reduced inflow of dollars”, because they say it “discourages software development in the country while promoting the importing of software made by Argentines”.
Computer workers’ union, the Computing Union Association (AGC), which supports the project, posted CESSI’s statement on social media and responded to every point on the list. They said they have been demanding a seat at the table for years so they can discuss with the companies and “guarantee all workers’ rights” through a collective bargain, but “CESSI is refusing to have this conversation”.
“It’s shameful to state that the formalization of freelance workers is synonymous with labor precarization. Today, in the face of the currency exchange gap, a contractor cannot declare their income, how can they justify buying a car? In that sense, the tech unified tax helps them,” they answered.
The bill establishes a tax structure so people working for foreign clients can sign up to the unified tax system in three income brackets of US$10,000, US$20,000 and US$30,000 per year. This will allow them to legally declare their income, pay taxes, and have healthcare plans and social security contributions. The State not only wants to formalize what different economists call “a new prosperous informality”, but also has the macroeconomic goal of getting those dollars, which currently enter the economy through illegal exchange agencies —with high commissions of 8%— or Payoneer cards, to start coming in through the Central Bank.
The project has been passed by the Chamber of Deputies and a majority opinion has already been issued by the Senate, but vote is still pending. Juntos por el Cambio have already stated that they plan to reject it. UCR senator Juan Carlos Martínez said the problem with this informal sector is the “abnormality” of the currency exchange controls and gap, as well as the different exchange rates, and that all that will get solved “starting on December 10” [the date the next administration will take office]. The economic staff of JxC aim to reduce the gap and unify the exchange rate as part of a stabilization plan.
Originally published in Ambito.com