20171101-法国巴黎银行-Argentina__Taxing_times_6页_227kb

Argentina: Taxing Times Summary

Core Content

The document outlines Argentina's upcoming tax reform plan, which is intended to reduce the tax burden, promote investment, and support fiscal consolidation. The reform is designed to be implemented gradually over five years to mitigate the initial fiscal impact and align Argentina's tax structure with other Latin American economies. The plan includes a new tax on investment income, tax incentives for corporations, and measures to reduce labor costs and distortions in the tax system.

Main Points

1. Tax Reform Overview

• The reform is part of a broader fiscal strategy announced by President Mauricio Macri.
• Finance Minister Nicolás Dujovne has detailed the reform, which aims to lower tax pressure modestly.
• The reform is expected to reduce the tax burden by about 1.5% of GDP if fully implemented by 2022.
• The government estimates that the tax revenue loss will be 0.3% of GDP due to reduced evasion and higher growth.

2. New Capital Gains Tax

• A new tax on investment income will be introduced, with only profits above a certain threshold subject to the tax.
• Foreign holdings of local financial assets will be exempt to secure international financing.
• The government is expected to issue USD 27bn in bonds in 2018, with about half raised abroad.

3. Corporate Tax Incentives

• A gradual reduction in income tax on corporations that reinvest their profits will be implemented starting in 2019.
• This is intended to encourage investment, which is currently projected at 18% of GDP in 2018.

4. Labour Cost Reduction

• The reform includes the gradual elimination of employer contributions on lower salaries.
• This aims to reduce the prevalence of informal labor arrangements.

5. Reducing Tax Distortions

• The tax on financial transactions will be restructured as an advanced payment on income tax.
• Provincial taxes, including the gross income tax, will be reduced gradually with provincial cooperation.

6. Implementation and Approval

• The tax bill is expected to be sent to Congress in about two weeks.
• Political support from the ruling coalition, bolstered by recent mid-term elections, is expected to aid in approval.
• Negotiations with provincial governors are anticipated, given their influence on Congress.

7. Fiscal Deficit and Spending Control

• The current fiscal deficit is large, and the government is cautious about implementing larger tax cuts.
• Spending cuts are also part of the reform strategy to ensure fiscal consolidation remains on track.

Key Information

• Gradual Implementation: The reform is phased over five years to avoid a significant fiscal shock.
• Fiscal Impact: The reform is expected to lower the tax burden by 1.5% of GDP and reduce revenue loss by 0.3% of GDP.
• Targeted Reforms: The new capital gains tax targets domestic investment income, while foreign holdings are exempt.
• Labour Reforms: Measures to reduce employer contributions on lower salaries aim to curb informal labor.
• Political Context: The reform requires legislative approval and may involve negotiations with provincial authorities.
• Fiscal Strategy: The government is balancing tax cuts with spending reductions to maintain fiscal discipline.

Legal and Regulatory Disclaimer

This document is a marketing communication and not investment research. It is intended for professional clients and relevant persons as defined by MiFID and other regulatory frameworks. It does not constitute an offer to sell or issue securities, nor should it be relied upon as investment advice. The information is based on public sources and may be subject to change without notice. BNP Paribas and its affiliates may have financial interests in the mentioned entities and may be involved in transactions related to the information provided. The document is subject to legal restrictions in various jurisdictions, and its distribution is limited to qualified investors and relevant persons.