“Luxury” tax: what will the new tax base be and what cars will it reach

As of March, the taxable base of the “luxury” tax will be updated and mid-range cars will be reached

As of March 1, automobiles that exceed $7,000,000 in price to the public must pay the “luxury” tax, as a result of the quarterly adjustment of the tax base on which said tax is calculated.

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In other words, starting next month and until the end of May – at which time a new quarterly adjustment will be made – 0 km cars whose retail value exceeds 7 million pesos will be covered by the first scale of Internal Taxes. , an aliquot of 20%; this will happen since the taxable base will go from $4,116,520 of factory value to 4,905,000 pesos.

This modification, which will come into effect in March, corresponds to an adjustment of 19.16% corresponding to the increases in the wholesale prices of vehicles in the quarter of October, November and December 2022; while the sum of inflation for those three months reaches a total of 16.3%, almost three points less.

A specialist warns that the update will also affect the price of low-end and used cars. (NA)

To the new taxable value, of $4,905,000, VAT (21%) and the commercial network commission margin (15%) must be added; However, the 20% rate of the “luxury” tax, which must be understood as a tax on the tax, means that the increase in the value of the vehicle corresponds to 25 percent.

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When making this account, the result is a value that, although it is not fixed, is around $7,000,000; Until the end of this month, the cars that must pay the tax are those that exceed $5,800,000 in retail price.

The cars reached by this first scale are those belonging to the medium ranges, taking the informal or “blue” dollar, these are vehicles whose price to the public exceeds $18,400.

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Meanwhile, in the second segment, where high-end automobiles are included, the tax base will change from $7,599,000 to $9,054,968, making the base price to the public approximately $13,000,000, since in This scale the tax is 35%, which results in, due to the nature of the tax, an increase in value of approximately 53.85%.

Since March, 0 km cars whose value to the public exceeds 7 million pesos will be hit by the “luxury” tax. (NA)

“Currently automobiles have a very high tax component in Argentina -began Sebastián Domínguez, partner of SDC Asesores Tributarios- and this tax makes it very difficult to access a car, whether it is 0 km or used, because if the price of the new, so do second-hand ones.

“What must be understood is that the ‘luxury’ tax works as a tax that is applied to the tax itself, this is so because the law defines it that way, that is, the 20% rate of the first segment is applied to the ex-factory price and over twenty percent itself, resulting in an increase of 25%; As for the second tranche, which corresponds to high-end cars, it is 35%, which is equivalent to an increase of 53.85 percent,” explained Domínguez.

“Specifically, this tax creates difficulties for citizens to access mid-range cars from now on, but it also affects exempt vehicles, since they function as substitutes for others, and more increases are demanded,” added the specialist.

“I think that these taxes should be lowered to promote the automotive industry, because it has an important industrial complex and there are many related activities that depend on it; I think the best thing would be to promote production, for there to be more car sales and for the national economy to also reactivate through this sector,” Dominguez concluded.

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