Friday, March 22, 2013

Taxing the Tourist: Argentina's AFIP Aims Low

Many times recently I’ve touched on the topic of exchange rates and, in that regard, I have to say that it’s so much easier to write on Chile or Uruguay, whose juridical and macroeconomic stability make it relatively simple to inform potential visitors of what they’ll encounter. Argentina, though, is a challenge, and there’s always the risk that details may change between the moment I finish writing and the time I post it.
Still, it would be negligent of me to ignore Argentina’s 20 percent surcharge on foreign travel – including airline tickets and tour packages - that the AFIP tax agency decreed that even non-resident foreigners will now have to pay. That’s not quite so alarming as it might sound at first: if you’ve purchased your plane ticket and other services before leaving home, it will not affect your travel within or beyond Argentine borders. If, however, you purchase a flight or other service that takes you beyond Argentina – say, for instance, the Buquebus ferry to Colonia or Montevideo – the Argentine provider will charge you that additional 20 percent. Cross-border bus trips, to Brazil or Chile for instance, will be at least 20 percent dearer than those to Argentine border towns.

That’s significant because, even if you have changed your foreign currency on the so-called “blue” market, where the rate skyrocketed above eight pesos this week, the ticket will cost you 20 percent more than the official rate of five-pesos-plus. That’s still a pretty good deal, as the breach between the official and informal exchange markets approaches 70 percent, but it’s obviously not so good as it was before. It’s a really bad deal if you’re using a credit or debit card, as you’ll be paying the official rate.

In theory, AFIP will reimburse you for your trouble. When Argentines fill out their annual tax returns, the 20 percent surcharge will supposedly be deducted from any balance due and, if there has been an overpayment, they will get refunds. The same applies, in principle, to non-resident foreigners, with AFIP stating that they will be reimbursed for the full 20 percent. To me, that falls into the “I’ll believe when I see it category,” and I would also be reluctant to provide the personal information – my US Social Security number – that AFIP is asking for.

That’s the scenario at present but, as matters advance or regress, I will do my best to keep readers informed about a country that continues to make things up as it goes along.

Moon Handbooks Chile, in Los Altos
Early next month – Tuesday April 9 at 7:30 p.m., to be precise – I will offer a digital slide presentation on Chile at the Los Altos Library (13 S. San Antonio Road, Los Altos 94024, tel. 650/948-7683). Coverage will also include the Chilean Pacific Islands of Rapa Nui (Easter Island) and Juan Fernández (Robinson Crusoe), as well as southernmost Argentina (Tierra del Fuego and the vicinity of El Calafate) that appear in the book. I will also be available to answer questions about Argentina and Buenos Aires. The presentation is free of charge, but books will be available for purchase.


Anonymous said...

From the allchile site:

That story gets crazier. In the emergency meeting of the Argie finance people yesterday they determined that they could not allow the cuevas to be getting 8.75 to the dollar. Or rather, they could not tolerate the worldwide news that the Argie peso was turning to shite.

Now, the cuevas are technically illegal, but the government has not gone to great lengths to shut them down, probably in part because some very important people in the country's government are also trading there. And since they have to be kept functioning but the government can't live with the peso spiraling into worthlessness, Economy Minister Lorenzino and Commerce Secretary Moreno, their perfectly coiffed if somewhat greasy hair on fire, got together to do what some are describing as clear evidence of the mafioso nature of the country. Now, since the money-changing cuevas are illegal and unregulated, the government couldn't say to them directly, OK, here are the rates you can and can't charge. So they "put out the word." Well, the story also goes that Moreno got on the phone to bank owner Alfredo Piano, who besides being on the very legit side of banking is also one of the heavies in the cueva trade. - The message for Piano was to get out the word to all the cuevas that the government really really really didn't want to see the peso crashing below 8.5 to the dollar. Still a long ways from the official rates, of course. So the cuevas, recognising that Guido might be coming around to break some cueva kneecaps, backed down and started giving dollars for 8.5, or at least those few still working did, because the trading in dollars just about came to a halt. Which means that dollar trading that is a little darker than the Blue Dollar trading is likely to have to resort to something closer to the 8.75 or maybe worse.

Surprised, the government figured they could do even better, and announced that they wanted to see the cueva rate at not more than 6 to the dollar, at which point everybody laughed in their faces and went home, leaving Cristina probably crying in a corner somewhere as she watches the country circling the drain.

Wayne Bernhardson said...

Thanks for the comment. A Bloomberg News headline today read "Cyprus Spokesman Says Must Avoid Becoming Argentina of Mediterranean..."

SaltShaker said...

Some of the banks have started lowering their credit card fees on some purchases, mostly at supermarkets, just to keep people using them and offset some of this craziness:

On the flip side, more insane-ness, officially now, you can't buy anything that costs more than a thousand pesos with cash, you're required to use either a credit or debit card so they can a) track it, and b) depending on what it is you're buying, possibly charge that extra 15/20%. Many places are now printing multiple receipts, each under 1000, adding up to the total, for folk who still want to use cash.

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