The Government’s options for improving State revenue – one of the alternatives it points to for reducing fiscal over-indebtedness and financing containment policies in a context of high inflation – they are delimited The executive power aims to swell its coffers by ensuring better compliance with existing taxes. It will invest in systems to prevent evasion, fraud and non-compliance.
The aim of AFIP is increase the tax burden without the need to present projects to the Chamber of Deputieswhich is the body through which tax matters should be dealt with in the first place.
Mercedes Marcó del Pont, the director of the agency, and her staff collaborated with a technical team from the International Monetary Fund to set mechanisms and targets to raise more over the next three years. They presented the Strategic Plan 2021-2025, one of the “structural benchmarks” of compliance set out in the lending agency agreement. With this, the government put the first check to the long list of reforms that must comply with IMF supervision.
AFIP’s intention is to meet or exceed the levels recorded in the “Third Five of the 21st Century” or its equivalent: the period between 2010 and 2015. In this Last year, collection as a percentage of GDP reached its highest point since at least 1980. According to the Ministry of Economy, it was close to 26%. Under the administration of Mauricio Macri, it fell to values closer to 23%, although still well above those of the 80s and 90s, when it was between 8% and 12%.
The agreed plan provides that the AFIP improves its recovery by just under 2 points of GDP by 2023 in real terms. Meanwhile, this year, according to collection agency sources, the entity wants to add $11 billion. The preliminary document let it be known THE NATION recognized that gaps and problems remained in the administration of the organization. The value added tax (VAT) non-compliance estimate takes this into account. According to AFIP, it fails to collect about 38% of the collection potential.
One of the main axes of the strategy is this tax, one of the taxes that concentrates the greatest flow of funds for the state. The second is income tax.
Improvements are expected in VAT collection (0.6% of GDP plus) and profits (0.4% of GDP plus). The problem with improving income from the first tax is that, according to tax experts and specialists, this requires putting pressure on the informal sectors. For example, four out of 10 outlets in Argentina are shops and supermarkets, many of which do not meet all tax registration requirements.
The AFIP focuses on three axes. The first is the voluntary compliance. For this, it seeks to facilitate the payment of taxes through the universalization of electronic payments, pre-prepared affidavits and integrated management of services with other provinces, among other proposals.
The second has to do with improve tools to detect and deter non-compliance. They seek to control fictitious tax credits and apocryphal bills, to carry out broader controls that include tax planning and relevant economic activities – with particular emphasis on those related to agriculture – and a series of objectives related to informal work. The third, with the development of artificial intelligence.
The issuance of apocryphal invoices and subsequent calculation of the fictitious tax credit constitutes one of the most widespread tax evasion schemes in Argentina, explains the strategy. This practice is exercised through companies or individuals who issue invoices for commercial operations that do not exist. In some cases, companies are set up exclusively to generate and market this type of instrument, and they are called “fictitious tax credit generating plants”. AFIP calculates that companies with apocryphal CUITs have developed 1,376 times between the period 2010-2015 and 2016-2019.
With regard to extensive checks, the AFIP will do more summonses for non-declaration under oath, more inductions to update data, massive campaigns to detect inconsistencies and it will develop “intelligent matrices” to derive cases, among other policies.
One of the areas that the agency will seek to develop is “the possibility of exploiting the data mining offered by e-commerce, including a transaction identification strategy, via virtual wallets, cryptocurrencies and other digital tools”. To do this, they will seek to have a financial information exchange (FATCA) and cryptocurrencies set up. By 2025, they want to develop a computer tool for the electronic control of the exchange of information on cryptocurrencies.
On the other hand, AFIP will seek to improve its income by employer contributions. It wishes to develop a greater capacity for early detection of informal work situations and to reduce the time required for investigation and control procedures and to reduce the number of workers who find themselves in clandestine employment relationship scenarios or with a registration that does not meet the economic conditions reality. It will place particular emphasis on the correct declaration of wages by employers, to prevent some of them from being paid undeclared.
The cereal activity and customs control are two other points of interest. To do this, they seek to implement satellite monitoring and control solutions with aerial drones, in order to detect stocks or fraudsters in the declaration of harvest regulations. With regard to foreign trade, they aim to improve the limits of the current risk management system, the deficits of the control system of goods and means of transport in the primary customs areas.