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ECONOMY | 14-07-2022 01:07

Argentina's government tightens cepo, raises tax on foreign-currency card purchases to 45%

Argentina’s government increases tax on card purchases in foreign currency from 35% to 45%; Tourists will be the most affected by measure, which kicks in Thursday; Rate remains at 35% for dollar savings.

Moving to protect Central Bank reserves, Argentina’s government announced late Wednesday that it had increased the so-called “tourist dollar tax” on purchases in foreign currency from 35 to 45 percent.

The move, which will greatly impact citizens who travel overseas or those who make purchases abroad, affects all debit and credit card purchases made in foreign currency abroad. 

"The update reaches the consumption of foreign currency for travel and expenses abroad," said the AFIP tax agency, headed by Mercedes Marcó del Pont.

The agency said it had changed the rate due to the strong contributory capacity of different economic sectors, especially those that could pay certain expenses in foreign currencies.

The 10-point jump is effective immediately, starting Thursday, July 14.

Argentina has a foreign currency shortage and must meet goals agreed with the International Monetary Fund to accumulate monetary reserves. The black market peso is near double the official spot rate, shielded by currency controls.

Argentina has tight controls designed to block the draining of foreign currency, with each citizen allowed to purchase only US$200 each month, with those subject to a 35 percent tax on top. There are no plans to raise this tax for now.

President Alberto Fernández’s government must meet goals agreed with the IMF related to the accumulation of Central Bank reserves. 

The move came just weeks after Silvina Batakis took over as economy minister, replacing Martín Guzmán, who resigned almost two weeks ago. In one of her first interviews since taking office, she argued that the “right to travel collides with the right to employment.”

It’s the second new measure in recent weeks aimed at tourists, after the government blocked the financing in instalments of purchases in duty-free shops.

It should be noted that there is no limit to credit card spending abroad. But if a debit card is used for a purchase, the purchase is deducted from the US$200 quota allocated to each individual every month.


– TIMES/NA/PERFIL
 

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