Government signed decree of measures to mitigate price differences at the border
The rule, signed by President Orsi and the ministers of Economy, Education, Industry and Labor, will come into force on December 1.
The Executive Branch signed the decree that seeks to mitigate the impact of border trade and reduce price differences with neighboring countries.
In August of this year, Parliament had approved law 20,419, which established a package of temporary economic and fiscal measures, aimed at strengthening local competitiveness, protecting employment and reducing informality.
Although the general spirit of the measures is maintained, the regulatory text introduces several adjustments in the percentages, territorial scope and the way in which the benefits are applied.
According to the law voted by the Senate, the main provisions provided for the elimination of the minimum VAT rate and the reduction by half of the basic rate, bringing it to 11% for purchases in retail stores located less than 20 kilometers from a border crossing, as long as the payment was in person with a debit card. In the decree finally signed by the Executive, this reduction is specified in a more limited way: instead of setting a rate of 11%, a discount of ten percentage points of VAT is established for sales included in the regime, maintaining the conditions of location and electronic payment.
The modification implies that the benefit is not a rate reduction “full”, but rather a refund or discount mechanism on the tax.
Another change is that the decree does not mention the elimination of the minimum VAT rate, a measure that was explicitly included in the articles approved by the Senate. The total subsidy for leasing POS terminals that the original project extended to monotributistas and small businesses does not appear either.
Instead, the regulatory text is limited to referring to the use of electronic means of payment as a condition to access the VAT benefit.
Regarding the special import regime, the decree maintains the creation of a border trade regime, administered by the Ministry of Economy and Finance (MEF) and the National Customs Directorate, but limits its scope. In the version approved by Parliament, general retail stores located less than 60 kilometers from the border could enter basic basket products without taxes or paratributes, under a simplified customs procedure. The decree, on the other hand, restricts the application to the border areas defined by the regulations—without setting a general radius of 60 kilometers—and details that the benefits will apply only to certain items and operations, under direct control of the MEF.
Regarding employment incentives, the decree confirms the exemption of up to 75% in employer contributions for new formal jobs generated in border areas during the next 12 months, maintaining the sectors reached: manufacturing industry, commerce, accommodation, gastronomy, administrative and cultural activities.
On the other hand, the extension of the Imesi discount on gasoline, which in the law went from 24% to 32% at border crossings with Brazil, is not included in the regulatory text. This provision, mentioned in the parliamentary articles, was left out of the decree signed by the Executive, which focuses on the VAT and employment regimes.
In turn, the decree entrusts the Planning and Budget Office with the implementation of the National Border Observatory. As provided for in the finally approved bill, it will have the responsibility of surveying and publishing, at least semi-annually, economic, social and relative price indicators in the bordering territories, in addition to issuing alerts and policy recommendations.
The decree will come into force starting next Monday, December 1. It has the signatures of the President of the Republic, Yamandú Orsi; the head of the MEF, Gabriel Oddone; from the Ministry of Education, José Carlos Mahía; from the Ministry of Industry, Fernanda Cardona, and from the Ministry of Labor, Juan Castillo.
