Argentina commits to IMF: Tax reform by year-end, pension reform post-2027

Argentina's government has formally agreed with the International Monetary Fund (IMF) to submit a tax reform proposal by the end of the year. Additionally, the administration has confirmed that a significant overhaul of the pension system will be deferred until after the 2027 elections. These commitments are outlined in the IMF staff's report detailing the second review of the existing agreement, specifically within the memorandum of economic and financial policies.

The "structural benchmarks" section of the document specifies that the upcoming tax initiative aims to "improve the efficiency and simplicity of the tax system" and pursue "continuous rationalization of costly tax expenditures." This could pave the way for the gradual elimination of taxes that distort trade and financial transactions. While the text avoids naming specific taxes, the agreement implicitly opens discussions on export taxes and the financial transactions tax (Impuesto al Cheque). The memorandum also stresses that the process will be gradual and coordinated with the provinces, aligning with ongoing talks between the Ministry of Economy and provincial governors regarding a new fiscal consensus.

The IMF's report also includes specific recommendations for reforming Argentina's tax system, which it describes as "complex, highly distortive, and unstable." The fund notes that over a quarter of the country's revenue comes from taxes considered distortive, particularly those on foreign trade, financial transactions, and provincial gross income (IIBB). Argentina reportedly has over 155 taxes and numerous special regimes, leading to a high dependence on indirect taxes.

In its recommendations, the IMF suggests a comprehensive reform focused on reducing export taxes and simplifying the tax structure. It also proposes advancing provincial tax reform to potentially replace Ingresos Brutos with a dual national-provincial VAT system, similar to models used in India or Brazil. The IMF estimates that a well-executed tax reform could yield gains equivalent to 3.3% of GDP through the elimination of exemptions, changes to income tax, and increased provincial revenue.