Official: The IMF's proposal to expand income tax

The International Monetary Fund (IMF) has proposed a significant tax reform for Argentina, suggesting that more workers should be subject to income tax. This initiative is part of a broader effort to reduce taxes considered "distortionary," such as export taxes and the check tax.

The IMF's proposal, outlined in its "Article IV" review of Argentina's economy, aims to partially compensate for potential revenue shortfalls by increasing the tax burden on income and monotributists. The fund described Argentina's current tax system as "complex, highly distortive, and unstable," negatively impacting economic growth, competitiveness, and formalization.

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the Argentine tax system remains complex, highly distortive, and unstable, which affects growth, competitiveness, and the formalization of the economy.

A comprehensive reform, according to IMF calculations, could generate additional revenue equivalent to up to 3.3% of the GDP, with roughly half of these resources allocated to the provinces. The report specifically warned against the reduction of the income tax threshold implemented in 2023 by then-Economy Minister Sergio Massa, which resulted in less than 1% of formal employees paying the tax.

While some of Massa's changes were reversed in 2024, the IMF believes the non-taxable minimum remains too high. It recommended "reducing the threshold so that at least 20% of workers pay income tax (as in 2019)." This adjustment, the IMF estimates, could generate around 0.4% of GDP in revenue. The report does not specify the exact number of new contributors, but returning to 2019 levels would mean millions of workers would again be subject to income tax.

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reducing the threshold so that at least 20% of workers pay income tax (as in 2019).