Argentina faces economic drag from overlapping tax systems

Argentina faces significant economic hurdles due to the overlapping of sales taxes across three levels of government: national Value Added Tax (VAT), provincial Gross Income Tax, and municipal fees. This tax superposition creates a heavy bureaucratic burden and legal insecurity for producers, often resulting in costs that are absorbed by companies rather than contested.

Specific legal disputes highlight the severity of the issue. A yerba mate company from Corrientes, Las Marías, took its case to the Supreme Court to challenge advance Gross Income Tax withholdings from Misiones that allegedly equaled over 300 years of its actual annual tax liability. Additionally, pharmaceutical manufacturers and energy companies like Refinor have reported similar arbitrary charges from municipalities despite lacking physical presence or employees in those jurisdictions.

Experts suggest that unifying these taxes into a single VAT, similar to recent reforms in India and Brazil, could boost GDP. In Brazil, studies estimate that such a reform could expand the GDP by between 4% and 12%.