In an effort to curb out-of-country credit card use to keep the nation’s economy strong, Argentina’s government has issued a new tax law on consumers who use their cards in other countries, as well as new regulations that will monitor residents’ card use.
The rules, presented by Argentina’s top tax collector, AFIP chief Ricardo Etchegaray, mandate a 15 percent tax on all credit card purchases made outside of the country. Additionally, all credit card transactions will now be monitored by the government. The latter measure requires all banks to submit filings on all transactions on cards issued by them.
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The main reason for the impending tax regulation is to rein in spending made in other nations by the wealthiest Argentinians, many of whom spend internationally to avoid inflation, which is reportedly worsening in the country.
“From October onward, (card-issuers) must report in detail all purchases made by cardholders and their co-signers, starting in September, both within and outside the country,” said Etchegaray. “With this move, AFIP seeks to assure that taxes are paid by those contributors who are able to pay more.”
Purchases outside Argentina using peso-denominated cards soared 48 percent in June compared to the year before, obligating the central bank to send $289 million out of the country in just one month. Overall capital flight soared to $23 billion in 2011.
Use of peso-denominated credit cards increased by nearly 50 percent in June on an annual basis, according to Etchegaray. This led to $289 million leaving the country during that span. In the 18-month period ending in August, he noted nearly 170,000 residents of Argentina spent roughly $1.5 billion internationally.
Though the regulations intend to keep this money revolving in Argentina, the move by the AFIP is also to reduce the effects of tax evasion, which according to The Associated Press, has become widespread nationwide.
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The 15 percent tax will become part of each Argentinian’s credit card bill each month. Those consumers who pay more than they owed in taxes the previous year will receive reimbursement of the tax each May. However, the AP notes inflation will likely diminish the value of these reimbursements.
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