September 22, 2020

Argentina feels the effects of COVID-19 on its tax collection



Argentina’s tax collection last March felt the adverse effects of the coronavirus pandemic on economic activity, official sources reported on Thursday.

Tax collection amounted to 443,636.7 million pesos (6,721.7 million dollars) last month, which represented an increase of 35.3% compared to the same month of 2019, an evolution well below the inflation rate, that in the third month of the year it would have been 52% year-on-year, according to private calculations.

As indicated by the Federal Administration of Public Revenue (AFIP) in a report, in March the collection also experienced a drop of 5.9% in relation to last February.

“To the conditioning that the low dynamism in the level of activity carried out since last year imposed on the collection, the economic consequences of the coronavirus pandemic were added,” the Treasury said in its report.

According to official data, the collection of the Value Added Tax (VAT) registered an interannual increase of 25.6% in March and fell 4.1% compared to last February.

According to the AFIP, the collection of this tax was “conditioned” by the effects of the social, preventive and compulsory isolation that has been in force for the entire Argentine population since March 20 to prevent the spread of the coronavirus.

In the first quarter of the year, Argentina’s tax revenue amounted to 1.4 trillion pesos ($ 21,212 million), with an increase of 41.1% compared to the same period in 2019.

The tax collection of the South American country totaled about 5 billion pesos (about 75,757 million dollars) last year, which represented an increase of 48.5% compared to 2018.

The Argentine economy is in recession after the outbreak of a currency crisis in April 2018 that later spread to other sectors and led to a general fall in activity and consumption, with high inflation, a picture that has deepened in 2019 .

By 2020, private consultancies predicted an economic contraction of 1.2%, but after the outbreak of the pandemic the forecasts have worsened substantially, towards a fall of between 4 and 5%.

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