Is there a chance that Javier Milei’s government will abandon this? called “check tax,” which will soon be 25 years old? Will the executive branch, which wants to move towards a lighter economy in fiscal matters, take this step without affecting the much-mentioned fiscal balance?
The proposal was released by the IARAF (Argentine Institute of Financial Analysis) team at a crucial time: the government is preparing to submit tax reform to Congress.
The IARAF makes it clear that the aim is to avoid an imbalance in government accounts The abolition of the interest rate for bank debits and credits could take place gradually.
The proposal calls for this process to take three years: between 2026 and 2028.
Check tax: from Domingo Cavallo to Javier Milei?
The tax has been around since 2001 and was introduced by Domingo Cavallo when he was Fernando de la Rúa’s economy minister. On paper it had the character of an emergency. But there was nothing temporary about it.
This “emergency” must be updated year after year, with the aim of maintaining it as one of the most relevant – and distortive – taxes in the Argentine tax system.
According to the IARAF “The current collection significance of the tax (more than 1.6 percentage points of GDP in 2024) certainly makes its immediate removal impossible.”
Tax reform: The government aims for complete but gradual abolition
According to IARAF experts, the best way to eliminate this tax, which so distorts economic activity and ultimately favors the informality of the economy, is to follow a gradual progression of the tax burden.
And so that this does not have an impact on tax collection, the IARAF suggested that the most appropriate mechanism in the current situation is to move quickly to the abolition of the tax, “Consists of expanding the possibility of calculating payments made for this concept Payment based on the affidavit of other national taxes.
At this point there is something interesting: today for medium and large companies, 33% of taxes paid on checking accounts can be credited as a payment against income tax. Percentage that reaches 100% for micro and small businesses.
“That’s what it means at this point at least 33% of the total number of subscribers “The tax on bank debits and credits does not represent a cost or a real source of tax revenue, since it makes it possible to reduce the tax liability of other taxes.”
Collection: The limits of disposal
In order to avoid distortions in the transition to the gradual abolition of the tax, IARAF specialists have proposed this Each taxpayer has a limit to use the approved down payment percentage.
This limit “will correspond to the tax increase compared to the previous year; therefore, higher advance payments do not mean a reduction in the current nominal income of the state treasury before the implementation of the proposed reform.”
A concrete example
To get an idea of the mechanisms that will operate after the abolition of the check tax, IARAF has used a possible example. “For example, if a taxpayer pays $1,000 to IDCB in 2026, According to the current regulations, 330 US dollars can be counted against income and the additional 17% ($170) proposed for the first year can only be charged as a deposit if the annual tax assessed by that taxpayer (whether VAT or profits) was $170 higher than that of the previous year.”
In the case of VAT, this calculation must be made in each monthly affidavit based on the balances accumulated up to each month (difference between tax debit and credit) in the first paragraph. This way, The original income level from profits and VAT would not decrease for the nation and provinces and they would lose only part of their nominal increase, which would be due to improvements in activity levels, particularly in the event of very subdued inflation.
What can happen to monotributists?
An important point of the possible reform takes into account monotributists. These taxpayers currently pay a differential rate of 0.25% (not 0.6%).
The IARAF proposal states that monotributists pay neither VAT nor profits You could keep the differential rate of 0.25%.
It is necessary to “implement a mechanism that allows the payments of these taxpayers to be taken into account for the single tax.”
Will Milei take the path to phase out the check tax?
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