World

Argentine government promotes law to tax “unexpected income”

The government of Argentina announced this Monday the submission to Parliament of a bill to create a mechanism through which the Treasury will capture part of the “unexpected income” obtained by large companies as a result of sharp increases in international prices since the beginning of the war in Ukraine.

“This war subjects us to two realities: that millions of human beings are at risk and that very few gain much from the effects of this war. allow”, said Argentine President Alberto Fernández, presenting the bill in an act with the Minister of Economy, Martín Guzmán.

The minister said that the government wants companies to win, but with “shared growth” that affects the whole of society and highlighted that other countries, such as Italy and the United Kingdom, have already devised similar mechanisms to “manage the unexpected returns of war”.

The initiative presented today proposes the creation of a “surcharge” of 15% on the “unexpected” component of earnings, defined as the net income that in real terms is higher than that of 2021.

The rate, which will be added to what companies pay annually in income tax, will be applied to companies with annual net profits that in 2022 exceed 1 billion pesos (about US$ 7.9 million).

In addition, to be covered by the “surcharge”, companies must meet one of these two conditions: that the profit margin (book profit on their revenue) in 2022 is greater than 10%, or that the increase in the profit margin in 2022 in relation to 2022 is at least minus 20%.

Guzmán argued that the war in Ukraine, which began in late February, had unleashed strong pressures on raw material prices across the world. world. This “shock” would have caused certain sectors of the economy to have the possibility of having an extraordinary income.

The poverty rate in Argentina was 37,3% of the urban population in the second half of 2021, while that of indigence stood at 8.2%, but these rates are expected to be higher in the first half of 2022 due to the increase in the value of the basic food basket.

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