A few days before the institutional transfer of the National Executive Power of the Argentine Republic, people related to foreign trade are waiting for the measures and effects that may arise with the new administration.
In this regard, we consider it appropriate to make an assessment of the before and after December 10, 2019 in terms of imports and exports.
1. Export Right
By decree 793/2018, the application of withholdings for exports of a definitive nature was established. This customs tax established a 12%, with the particularity that it may not exceed four pesos for each US dollar of the taxable value, including the amount resulting from the application of the rate established therein, or the official FOB price, as appropriate. For certain goods, this limitation was set at three pesos per dollar.
The regulation was observed by different exporters on the basis of a lack of legality, as it was imposed by decree of the Executive Power. This caused that, in many cases, a refund was requested when payment was made. Currently, there are rulings by the Courts considering decree 793/18 unconstitutional by ruling that it should be repeated in favor of the claiming exporter. It should be noted that for compliance, the judicial decision must be final.
What could happen after December 10?
Decree 793/2018, ratified by article 82 of the 2019 Budget Law, is valid until December 31, 2020. Based on the law itself, it is foreseeable that all exports for consumption will continue to be taxed with the export duty.
However, based on the analysis of several economists, it is assumed that among the future measures, this type of tax on exports will not be eliminated. On the contrary, it could be considered that not only will they remain in force, but the scheme of the limit of 4 or 3 pesos per dollar could be modified or there will be no limit at all to impose a precise percentage on each merchandise.
The search for income to increase the treasury's coffers suggests the application of measures of this kind. If this is the case, compliance with the constitutional precepts that assign tax powers to the National Congress must be observed. Otherwise, it could be considered a tax imposition that is not in accordance with the law.
2. Export of Services
Decree 1201/2018 established the imposition of export duties on services, using a scheme similar to the tax on other goods under decree 793/2018, also in force until December 31, 2020.
What could happen after December 10?
Although the regulation (decree 1201/2018) was valid until December 31, 2020, it has been a highly questioned measure. It is considered that it affects not only a universe of goods that are in full growth and promotion at national and international level, but also exporters of services that turn out to be an important source of entrepreneurs; a tax of this kind acts as a barrier to the evolution of these subjects.
In an analysis of the history of previous governments, it can be seen that there have been measures aimed at avoiding the imposition of obstacles to the development process of entrepreneurs and service providers. In this context, it could perhaps be conceived that the tax measure for these goods be revised.
3. Statistics Rate
As of Decree 332/2019, an increase in the Statistical Rate from 0,5% to 2,5% was established with a proportional scale on the tax base. In many cases, it is alien to the premises of international agreements, such as the General Agreement on Tariffs and Trade (GATT) ratified by Argentina through laws 23.311 and 24.425. Accordingly, importers have considered making a claim for a refund due to the effects of its inapplicability.
What could happen after December 10?
There is no doubt that the increase in the Statistics Tax and the imposition of the export duty have arisen from the need to increase tax collection in response to the urgent needs of an Argentina that unfortunately always suffers from a state of emergency. For this reason, it is foreseeable that the government in charge of the administration as of December 10 will maintain this measure.
But if this is the case, a regulation must be expressly issued, given that the validity of this increase expires on December 31 of this year (art. 1 decree 332/2019).
4. Importation Licenses
By means of resolution 523/2017, the Secretariat of Commerce of the Ministry of Production established the obligation to process Automatic Import Licences for merchandise included in all tariff items of the Common Nomenclature of MERCOSUR in definitive imports. It also established Non-Automatic Licences for certain merchandise. The framework of these prior requirements for the purposes of seeking to formalize import operations, in its application has not acted with restrictive force. This made commercial opening possible.
What could happen after December 10?
Although the new government takes over the administration with an unrestricted mechanism for imports, based on decree 609/2019, resolution 18/2019 of the Finance Secretariat of the Ministry of Finance and regulation "A6770" of the Central Bank of the Argentine Republic and its amendments, by imposing an "exchange rate restriction" it generated certain delays and reduction of imports due to the need to comply with transfers for purchases abroad. This leads to consider that it is feasible to maintain the exchange restriction and such a measure can be accompanied by a modification regarding the operation of licenses; "quotas" could be established for the import of certain tariff items, thus limiting the universe of imports for consumption. There are precedents in previous governments regarding provisions of this nature. The use of these mechanisms to tighten trade opening led the Justice to intervene and observe this type of actions typical of coercion of constitutional guarantees of individuals. This is how he ordered the officialization of customs import operations to allow proper commercial exercise.
5. Export incentives
One of the first measures of the outgoing government was to reduce restrictions on the collection of refunds from exporters, favouring the free negotiation of foreign currency for the payment of profits from export destinations – general resolution 4212/2018 – as a result of decree 893/2017. In this way, the regulation that established the obligation to bring into the country the foreign currency equivalent of the export of national products and negotiate them in the single exchange market within the deadlines established in the regulations was repealed.
These measures made it possible to streamline and effectively process the process towards the collection of export incentives.
What could happen after December 10?
The new government will surely try to obtain foreign currency through exports, maintain withholdings and may even increase the tax. A policy to increase the volume of goods exported, in their type, species and quality, should deepen export incentives and not curtail their collection. As their name indicates, they are a fundamental incentive for exporters. These incentives, beyond being provided for in the application regime for certain tariff items, must be available for collection through an agile mechanism and within reasonable times provided for in the application regulations themselves, as established in the Customs Code, a rule regulated by decree 1001/1982.
By: Dr. Guillermo Felipe Coronel, Lawyer specializing in Customs Law
Aduana News is the first Argentine customs newspaper to launch its digital version. With 20 years of experience, its publications and initiatives aim to provide the most relevant knowledge on customs issues in order to contribute to safe trade in the region.
