Small taxpayers who enroll in the Simplified Regime of the City of Buenos Aires (CABA) during 2022, will have all the fees for the year corresponding to Gross Income discounted. This was established by Resolution 80/2022 of the City Government, which, in order to become operational, requires regulation by the Government Administration of Public Revenues (AGIP).
Small taxpayers of the Gross Income Tax will be considered those for the activities achieved in the fiscal period 2021, total gross income (taxed, untaxed, exempt) less than or equal to $2,600,000, a figure that represents an increase of 49.47% compared to the previous year.
“In principle, the regulations should not change the objective of the Resolution and all taxpayers of the Simplified Regime who register during 2022, should be exempt from entering this year’s quotas,” explained the tax expert Sebastián Domínguez, from SDC Tax Advisors.
In his opinion, it is a measure “That helps those who are going to start their activities, as well as those who are analyzing registering and formalizing activities.” However, he warned that “given the very negative effects that the tax has on Gross Income, should tend to be eliminated and replaced by a combination of other taxes”.
In principle, the regulations should not change the objective of the Resolution and all Simplified Regime taxpayers who register during 2022 should be exempt from paying this year’s fees (Domínguez)
It should be noted that the Simplified Regime is optional for those who only carry out activities in the City of Buenos Aires and are natural persons, undivided estates or companies with up to three partners.
When starting the activities, it is necessary to fit in the category that corresponds according to the area affected by the activity and the estimate of the expected annual income.
Then, after six months, the gross income earned and the electrical energy consumed in the period must be annualized, in order to confirm the categorization, modify it or exclude it from the Regime.
The income exemption does not apply to local taxpayers from the City of Buenos Aires not adhered to the Simplified Regime or to Multilateral Agreement taxpayers who carry out activities in Buenos Aires territory.
a distorting tax
“Gross Income is a tax that generates a very important disapproval. What happens is that it would have to be replaced by a sales tax in the last stage, as happens in the United States, the tax, which is charged to the final consumerDominguez told Infobae.
In that sense, he stressed that the problem is that the collection that this tax can generate for the final consumer is not enough to replace gross income.
It is a multi-phase tax that generates an accumulation effect and a pyramiding effect, distorting the economy and promoting the vertical integration of businesses (Domínguez)
“That is why it would be necessary to replace it with various taxes. One for sale late stage, increase property tax assessments in jurisdictions where it is very low, increase car assessments in jurisdictions where it is low”, he detailed.
The gross income tax is levied on the different stages of the production cycle, including investment in capital goods. “It is a multi-phase tax that generates an accumulation effect and a pyramiding effect, distorting the economy and promoting the vertical integration of businesses,” explained the tax expert.
In this sense, he affirmed that the largest companies that have the possibility of integrating are benefited to the detriment of SMEs, which find it difficult to do so. On the other hand, he mentioned that the tax on gross income affects exports due to the impossibility of returning at the border the tax actually paid in the previous stages.
“In this way, exports of goods and/or services will contain tax on gross income within their costs, losing competitiveness with respect to suppliers from other countries. For the reasons discussed, the gross income tax should be replaced,” he concluded.