Amid foreign exchange tension and a dramatic weakening of the peso on parallel markets, Argentina’s government on Tuesday moved to tweak its complicated web of currency controls.
As the black market ‘blue dollar’ (‘dólar blue’) surged to a record 1,000 pesos per greenback, Economy Minister Sergio Massa ordered the unification of three exchange rates, including the so-called ‘Qatar’ and ‘Tarjeta’ rates.
The move, confirmed by the AFIP tax agency in Resolution 5430/2023 in the Official Gazette, means that purchases abroad or with US dollars, whether with credit or debit card, will now face three taxes: PAIS at 30 percent, 45 percent for income and 25 percent for personal assets. Thus, the value of the official dollar exchange rate will be taxed 100 percent for these types of purchase.
The previous cap of US$300 per person has also been eliminated, given the unification of the rates. The new rate began trading at 731 pesos on Tuesday – double the official exchange rate.
According to the resolution’s recitals, this new provision is aimed at “sustaining the redistribution drive of fiscal policy.” The number of exchange rates in force is thus reduced, but, conversely, a partial devaluation is established.
These measures only affect consumers, both those who wish to buy foreign currency to save and those making purchases with a card in foreign currency, and not companies, the government said, and thus it should have no effect on inflation.
The tweak comes in the middle of volatility on exchange markets, with a record breach between the official rate and black-market dollar.
How is the new dollar value calculated?
This new unified dollar value, at 731 pesos (as of October 9, 2023), is obtained thus:
– Dollar at official rate: 365.50 pesos
– 30 percent PAIS Tax: 109.65 pesos
– 45 percent income tax levy: 164.48 pesos
– 25 percent personal goods: 91.38 pesos
Which purchases will be affected by the changes in the dollar?
Transactions which will be affected, and which will be applied the new unified exchange rate, are:
– Purchases of savings dollars
– Payments in pesos of credit, charge and debit cards purchases in foreign currency, no matter what the monthly sum
– Payments in pesos of services abroad hired by travel agencies in this country
– Payments in pesos of ground, air and waterway transport outside this country (except for ground passenger transport to bordering countries)
– Payment in pesos of imports of certain luxury products
– The values of such streaming services as Netflix, Amazon or Spotify will also be affected, as their rates are set in dollars.