what is it, who pays for it and which operations are affected?

( Spanish) — The Tax for an Inclusive and Solidarity Argentina —known as PAIS tax— is paid on some operations with foreign currency in Argentina. It was introduced by the government of Alberto Fernández in February 2020 and is in force for a period of five fiscal years.

Of the proceeds, 70% goes to programs under the execution of the National Social Security Administration (Anses) and the Comprehensive Medical Care Program (PAMI), while 30% must be used to finance social housing, infrastructure , promotion of tourism and others, according to the Federal Administration of Public Revenues (AFIP).

Professor César Litvin, CEO of Lisicki, Litvin y Asociados, explains that “the objective of this tax was to discourage the purchase of foreign currency and the consumption of goods and services that are paid for in foreign currency.” He adds that the measure was aimed at “protecting the reserves of the Central Bank, making access to the exchange market more expensive and thus avoiding the outflow of ‘cheap’ dollars for the purpose of hoarding or non-essential consumption.”

The tax official Daniel Lejtman adds that “the tax arose as a discouragement to carry out operations in foreign currency from the lack of foreign currency that the Government began to suffer towards the end of 2019.

To which operations does the PAIS tax apply?

The tax was created by Law 27,541, which declares a public emergency in economic, financial, fiscal, administrative, social security, tariff, energy, health and social matters and authorizes the Executive Power to carry out the procedures and acts necessary to recover and ensure the sustainability of public debt.

The lien covers different transactions, such as:

• Buying foreign currency to save. The measure reaches traveler’s checks.
• Purchase of cultural and recreational products or services in foreign currency and import of merchandise.
• Foreign currency exchange in financial entities.
• Payment of services abroad contracted through local travel and tourism agencies.
• Payment of passenger transport services to international destinations, except to neighboring countries.

The rate is 30% in the case of the purchase of foreign currency, expenses with debit and credit cards in foreign currency and tourist services abroad. While for digital services, such as Netflix, YouTube Premium or Spotify, for example, it is a reduced rate of 8%, explains Lejtman.

Argentine pesos and one US dollar.

Who is exempt from the PAIS tax?

“In principle, there are no people exempt from paying it, although there are expenses in foreign currency that are excluded from the tax,” says tax expert Daniel Lejtman.” It refers to some medical benefits and educational services, in addition to land tickets to countries bordering Foreigners are not affected by the tax.

Is there a refund of the COUNTRY tax?

The accountant Sol Sarquis, from the Sarquis & Sarquis studio, explains that “there is no type of refund of this tax.” She adds that “many may confuse it with the perception of income tax of 35%, or currently 45% and 25% on account of personal property tax, of which a refund can be requested.” Litvin complements that “it is only returned in the case of a payment without cause.”

Criticism of the PAIS tax

Specialists agree that the tax does not fully meet the objective of discouraging transactions with foreign currency and brings several negative effects such as the increase in the cost of products and services, as well as the widening of the exchange rate gap in Argentina.

Sarquis maintains that “many times these measures do not achieve their objective of lowering the consumption of foreign currency, but rather only end up having a collection purpose, generating a floor of exchange rate gap that later ends up affecting the normal functioning of the economy.”

Along the same lines, Lejtman points out that “although the intention was to discourage operations in foreign currency, given the obvious lack of foreign currency, the recipe used was the same as always and, even worse, the objective was not achieved.” wanted”.

For Litvin, the PAIS tax has a distorting nature “because it does not measure the taxable capacity of the subjects who pay it. In other words, it does not distinguish between rich and poor, anyone who needs to access foreign currency or goods or services that are paid for with them, must pay the tax”.

And he adds that the objective of protecting the Central Bank’s reserves was not met. “The only condition and incentive for Argentines to save in local currency requires solving the endemic problem of inflation and once again having a currency that generates confidence. A tax on the acquisition of foreign currency will never reverse this underlying and structural problem”, he says.