Tuesday, December 06, 2022

Inflation and personal wealth tax for fiscal year 2022

Inflation and personal wealth tax for fiscal year 2022

In particular, we will mention in this collaboration the updates that must be made to the parameters of tax on personal property for determination of tax for the fiscal year 2022.

It should be remembered that the unnumbered article was suitably included after Article 24 of the Tax Law (Law No. 23,966) which establishes that the non-taxable minimum (for each room considered in General and Article 24 ) and included in the scale of applicable rates (paragraph 25) shall be adjusted annually by a coefficient arising from the annual variation of the CPI corresponding to the month of October of the first year of the adjustment in respect of the same month. of last year.

The above update of prices is effective from fiscal year 2022 and onwards, and for this reason we analyze the projection of these amounts and their impact on lien settlement in this collaboration.

1| CPI Growth

In accordance with the foregoing, the indicated amounts should be adjusted annually by the coefficient that results from the annual variation of the Consumer Price Index (CPI) of the normal level provided by the Institute of Statistics and Census, corresponding to the month of October of the previous year. the year of adjustment in relation to the corresponding month of the previous year (Article 24.1 of the Law).

Considering that the year of adjustment is 2022, the index corresponding to the month of October 2022 (359.657) should be calculated on the index for the month of October 2021 (547.802). Thus, an updated coefficient of 1.5211 is determined, which should be applied to determine the non-taxable minimum for the year 2022 and the new amount corresponding to the tax scale bracket.

Inflation for the year 2022 is projected to be around 100%. With this projection in mind, we believe that the application of legal mechanics makes a significant difference between the inflation of the period that is intended to be adjusted and the index that will eventually be implemented, which is only half (52%) does cover. Estimated inflation for the financial year 2022.

2| Zodiac forecast for 2022

2.1. non-taxable minimum

Taking into account the coefficients we have determined earlier, we allow the following values ​​to be projected for the non-taxable minimum applicable to FY 2022:

a) Minimum non-taxable (applicable to individuals residing in the country): $9,126,699

b) Non-taxable minimum applicable to immovable property used as a home (for individuals or undivided property): $45,633,495.

2.2. scale of applied aliquots

In the same way, we have updated the values ​​of the goods and the amounts of fixed taxes corresponding to each installment provided for in Article 25 of the Tax Law:

a) applicable to the value of property located in the country (or repatriated) that exceeds the non-taxable minimum (see Table 1); b) The table applicable to property located abroad that exceeds the non-taxable minimum not computed against property in the country (see Table 2).

Note: Without prejudice to the specifications present in the valuation of each property that constitutes the wealth of the people, it is generally observed that by the very mechanics of the law, the non-taxable amounts and clauses of the scales are adjusted only 52%, While goods in the economy will generally grow by 100%, a fact that can lower the tax threshold and capture a greater number of taxpayers.

3| real estate tax assessment

Sub-section A of Article 22 of the Lien Law), when referring to the valuation of immovable property, establishes that the value to be computed for these cannot be less than the taxable basis—current as on 31st December of the year for which Is. The tax is settled, for the purpose of paying immovable property taxes or similar taxes or at the financial value determined on the date above, in accordance with the procedure and method established for that purpose by a federal body constituted for that purpose .

The provisions of the preceding paragraph shall take effect from the first financial period immediately following the determination of the procedures and methodology in matters of financial appraisal by a federal agency in point II of Annex to Law 27429.

Meanwhile, for this purpose, the current tax assessment as on 12/31/2017 updated by CPI up to 31st December of the financial year should be considered. This updated mechanism has been implemented inclusive from FY 2018, and we believe that it should be repeated for FY 2022, as we understand that the procedures and methodologies for tax assessment have not yet been laid down).

For this purpose, we have estimated the CPI index for the month of December 2022 by looking at the published index as the date of July 2022 (851,761), as well as inflation for the month of August 2022 as the date of this association. Inflation is reported in (7%) and estimates of inflation in the order of 6% per month for the remaining months of the year. This gives an estimated CPI index of 1150.6016 for December 2022.

If this happens, and the CPI index for December 2017 is 124.7956 and the projected index for December 2022 is 1150.6016, the coefficient to be applied for updating the fiscal valuation (base December 2017) will be the same as 9.21989.

On the other hand, if we compare the growth of this CPI index during the year 2022, it is seen that it will increase in the order of 97%, i.e. the adjustment on the tax assessment of real estate will be increasing approx. Double the increase in non-taxable minimum and scale classes.

4| dollar goods

It is common for people to protect themselves in property or goods whose market value is expressed in foreign currency, and therefore their tax base experiences a nominal (not real), due to the gradual devaluation of the Argentine peso. Experience in foreign currencies.

In general, an increase in the prices of these goods should coincide with the general inflation of the economy, when it is understood that devaluation is nothing more than a correction of internal inflation.

However, the fact that the value of the currency should be considered at its official price (the buyer rate of the Banco de la Nacional Argentina) and given that this value is administratively established, it is necessary to analyze that What can happen in the year 2022.

For these purposes, it is assumed that the government will continue to devalue the Argentine peso gradually and in the same proportion it has done during the year 2022 (by mid-September, the date of this cooperation).

With this in mind, we have estimated the value of the US dollar (buy exchange rate) for 12/31/21 on the order of 156.84.

If this estimated value is compared with the value of the current currency as of December 31, 2021 ($102.52), it is observed that the official dollar will experience an increase of the order of 53 percent, which will be the same increase as the adjustment. Must be applied to non-taxable amounts and scale brackets (52%).

In other words, dollar goods will experience an increase (in pesos) in valuation, which will be applied at a minimum and scale, there should be no distortion in respect of these goods.

Anderson Argentina partner

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