The variation of the wholesale inflation, measured by INDEC, from the end of 2001 to date it was 1843%, without including the months of November and December 2015, for which no information was published.
The balances included the inflation that occurred from 2002 to March 2003, inclusive, reaching 118%, and thus leaving out, without recognizing, most of the variation in prices. These indices should also be used to adjust each of the taxes, but were recognized only in limited cases. A project to create the Tax Value Unit, which would make it possible to update some taxes, sleeps in Congress.
The adjustment for accounting inflation began to be seen in the balances in the year 2018, while the tax previously had an option to update at a cost to the taxpayer who chose to do so in 2017. As of 2019, the adjustment for inflation in the income tax was applied again, but it was too late. However, in order to take advantage of it, certain levels of annual inflation had to be exceeded (55%, 30% and 15%) and there were limitations in being able to apply it in full, since the result could be computed in annual installments, which were not adjusted for inflation.
In addition, from the moment in which it was accepted to recognize inflation, it was decided change the fit indexfrom wholesaler to consumer. This occurred despite the fact that the former better measures the variations in average prices in the economy. In reality, it was changed for the simple fact that its annual variation did not exceed the inflation percentages that enabled the adjustment.
Those who did not use the update option, which the revaluation law gave, can now only adjust the costs of the fixed assetsamong others, which were incorporated as of 2018, all of the above are considered at historical values.
The adjustment for accounting inflation began to be seen in the balance sheets in 2018
The rules that prohibit updating
In accounting matters, decree 664 of the year 2003determined that the different control bodies (General Inspection of Justice, National Securities Commission, AFIP, Central Bank, etc.) did not have to accept financial statements adjusted for inflation.
On the other hand, accounting standards recommend applying the Inflation adjustment in the financial statements when the variation of wholesale prices, of the last three years, exceeds the coefficient of 100%. If the update is applied to the balances, all non-monetary items and income statements should be adjusted. In all that time, the decisions made by the shareholders’ meetings are invalid, since, for example, they distributed historical results that, since they were not adjusted for inflation, were fictitious.
Although the consumer price indices, which were prepared by INDEC, may be questioned, it seems that the same would not happen with wholesale prices, which registered a variation twice more than the first ones, from 2002 to the present. The question that must be asked is why this inflation has not been transferred to retail prices.
From the tax side, laws 24,073 and 25,561, keep the adjustment for inflation in the different minimums, deductions, scales, balances in favor and other variables that influence taxes.
Accounting standards advise applying the adjustment for inflation in the financial statements when the variation in wholesale prices in the last three years exceeds the coefficient of 100%.
How devaluation influences taxes
On the side of the changes in the exchange ratethe variation of the quotation of the different dollars notoriously alters the costs and produces that there are winners and losers. These increases were transferred to the prices of goods and services, thus influencing the liquidation of the taxes that are collected. This is the main reason that explains the increase in tax collection.
For companies and individuals, changes in the value of the dollar are not innocuous, they have consequences ranging from formal issues, to the effects produced by exchange differences in the settlement of national and provincial taxes.
Billing in dollars
By emergency law (25,561) The prohibition to include indexing clauses in invoices continues. Meanwhile, the convertibility law (23,928) still allows the invoicing of an operation to be carried out in dollars. Currently you can bill in dollars. However, in this case, the customer who receives an invoice in dollars will have problems paying it.
If you own the banknotes backed by settlements of the official exchange marketit cannot deliver them since in this way it would be failing to comply with the anti-evasion law (25,345), which requires bankarization of all payments over one thousand pesos or the equivalent in foreign currency.
Complicating things more there are no checking accounts in dollarsnor can they be transferred by bank, leaving only the option of depositing the balance owed on the invoice in the supplier’s savings account, a mechanism authorized by the anti-evasion law. But in this case, the tax on debits and credits would have to be paid.
The variation of the price of the different dollars notoriously alters the costs and produces winners and losers.
devaluation in taxes
In the Value Added Tax, when the invoice issued in dollars is paid in pesos at a later date considering the price of the ticket on the date of payment, according to the AFIP ruling (03/31) the total exchange difference generates a new fiscal debit that will have to be be paid by the taxpayer. The final price of the invoice must be compared with the total amount paid, VAT is calculated on the difference. In the same way, this amount integrates the Gross Income tax base determined for each jurisdiction.
In the estate taxes paid by individuals, assets expressed in dollars that are at December 31 or at the end of the fiscal year, must be converted to the quoted value of the foreign currency on that date. For example, if a person has dollars in a safe deposit box or in “the mattress”, at the time of paying for Personal Assets, they have to calculate them at the quoted value of the bill at the end of the year.
In reference to Income TaxThe results for the purchases and sales of foreign currency that people carry out in the official exchange market are exempt from Income Tax.
They are also not recorded. the profits that are produced by the price difference of holdings of dollars or eurosgenerated at the end of the year. On the other hand, companies must include the results for the sales of dollars and the higher values that are produced by their simple possession, at the end of the fiscal year that is used as the basis for calculating the Income Tax.
It is important to remember that any operation that is carried out using foreign currency, acquiring a good or contracting a service, must have the proper tax justification in tax returns. For example, prior to the purchase of a property in dollars, the foreign currency must appear in the affidavits filed with the AFIP. Likewise, all banknote movements recorded in the tax returns must be backed by official exchange market settlements.
All of the above shows that both inflation and devaluations, to the extent that they are not recognized, harm all taxpayers and only benefit the State.