Page 10 - MONTT LATIN AMERICAN MAGAZINE, DECEMBER, 2021

Argentina: Taxes and Compensation for Dismissal
In view of the disapproval of the 2022 Budget, the Government authorized the provinces to increase taxes. At the same time, regulations were issued
to modify the taxes on personal property.
Poverty in the Country
A pact that authorizes the creation of new federal taxes was recently signed by the Argentine government with 23 governors of the country, of all political tendencies, which constituted a true lifeline for those areas that need urgent money, because, surprisingly, recently the opposition denied the 2022 Budget law sent by the Executive and because many provinces also live very narrow from an economic point of view after the tax agreement signed with former President Macri in 2017 that forced them to reduce taxes on companies and individuals.
“This agreement serves us a lot in the discussion we have with the International Monetary Fund because it shows us a country that projects the future in rational fiscal terms and with the consensus of all provincial governments,” Fernandez said at the time of signing. Now the regional authorities will supplement the missing money that reaches around USD $ 11,000 million with a new inheritance tax, which in Argentina is only collected in the province of Buenos Aires. The agreement links spending to GDP growth, instead of inflation, as established in 2017, during the Macri government. The opposition governors stated that they will not raise taxes, but they agreed to sign the agreement because the letter enables but does not oblige. The only thing missing was the head of the Government of Buenos Aires, the opposition leader Horacio Rodríguez Larreta, who was confronted with the Casa Rosada in court over Fernandez’s decision to withdraw the funds he had received during the Macri government to finance items for the police.
Personal Property Tax
The Argentine Industrial Union (UIA) stated in a harsh statement that the new tax agreement “generates enormous concern because it increases the tax burden in the productive sector by eliminating the progressive reduction in gross income originally established in 2017. This agreement is a way to adjust spending in the provinces in exchange for money coming from the central government. But the economic recession, inflation and the rise in the primary deficit (before paying interest on the foreign debt) dynamited the possibility of reducing tax revenues. The Government will now bring the pact to the IMF. Without a Budget Law, it will be in a position to, at least, show a document that speaks of a consensus with the territorial leaders of the opposition.
But it wasn’t the only tax hike. With 37 votes in favour and one against, in the last session of the year, the Senate of the Nation
approved, and turned into Law, the project that modifies the minimum taxable base of the Personal Property Tax, in a session to which the opposition was lacking. In this way there was a minimum non-taxable increase from 2,000,000 to 6,000,000 Argentine pesos. Regarding the house-room, the lien rose from an exempt amount to 30,000,000. Regarding the annual update of amounts, from the 2022 fiscal period, the amounts of the non-taxable minimum, exemption for house rooms and amounts of the scales will be adjusted annually according to the IPC index. Likewise, new scales were created for goods that exceed 300,000,000 pesos
Regarding the differentiated rates for goods abroad, those provided for in the rule prior to the current reform are maintained.
There will be a decrease in aliquots for foreign assets due to the repatriation of certain financial assets until March 31st of each year, as provided by Decree 912-2021.
Dismissal of Workers
On the other hand, as expected, the decree of necessity and urgency that established in 2020 the prohibition of dismissals without just cause in Argentina will not be renewed and came to an end as of January 1st, 2022. The last extension of the measure had extended it until December 31st of this year.
According to the newspaper Ámbito Financiero, the government would also have decided the expiration date of the severance pay surcharge in force, which is informally known as “double severance pay” for dismissal. The amount of the surcharge, which is capped at 500,000 pesos, is expected to be gradually reduced until it disappears in the middle of next year.
Likewise, in the Official Gazette of December 24th, a new decree (DECNU-2021-886-APN-PTE) was published that establishes that in the case of dismissal without cause, the employer must pay, in addition to the corresponding compensation in accordance with the applicable legislation, an increase equivalent to: 75 percent of the amount thereof, for exemption that occurred between January 1, 2022 and until February 28th 2022; 50 percent for terminations that occurred from March 1st, 2022 to April 30th, 2022 and 25 percent for those that occurred from May 1st, 2022 to June 30th, 2022. In addition, imposes the limit that the amount corresponding to the increase may not exceed, in any case, the sum of 500,000 pesos.
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