Argentina reduces tariffs on capital goods, IT products, exempts nationals from customs duty
Reports indicate that on September 20 the Ministry of Production and Labor announced a reduction between 10-12% for over 300 tariff positions (products) labeled as capital goods, including farm machinery and industrial equipment. Subsequently, on September 27 the government introduced a directive suppressing tariffs related to IT products, including modems and communication equipment. Finally, on September 28 it was announced that nationals will no longer be required to declare and pay taxes for phones, laptops, and tablets purchased abroad upon entry to the country, provided they are for personal use. On February 2017 the government had removed taxes on imported computers sold in the country.
Although these measures are aligned with the government’s market-oriented outlooks, they were likely motivated by the audits conducted by the International Monetary Fund (IMF), which is currently supervising Argentina in restructuring its economy to attract global financing. Although tax relief will help local producers and industrialists to acquire capital goods to expand their businesses, especially against the backdrop of a surging U.S. dollar, it is yet unclear whether these measures will have a positive effect in attracting foreign investments in the short-term. In this sense, the success of the said measures will most likely depend on how events unfold in the ongoing currency crisis. Another steep increase of the dollar against the ARG peso could mitigate the positive effects of tax relief. In turn, although the decision to exempt nationals from paying taxes for daily-use IT products purchased abroad will not necessarily have an impact on the economy, these measures were probably adopted to shore up support for the government among the middle class. Until recently Argentina ranked first as the most expensive country for buying consumer electronics.