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Automotive companies postpone January price increases pending changes in the luxury tax

Currently, all 0km over $14,700,000 They must pay a tax of 20%, which implies an increase in the values ​​of 25% for this scale due to the method of calculation, while the second scale pays 35% and increases around 50% in the final value of the cars.

This month’s price adjustment led to almost all models being affected by the tax surcharge or “capped” below that value to avoid paying it.

If the so-called “luxury” taxby increasing prices in January there would be no way to continue keeping these 0km out of the tax and this would cause prices to jump well above the adjustment necessary for the inflation.

It is true that many models are being sold on the market at premium prices, especially imported ones, which exceed that value, but since it is a private negotiation between dealerships and buyers, they do not pay the tax.

According to what this media learned, the decree would be known in the coming days. “They told us it comes out during the week. “Most likely towards the end of the week,” they explained to Ambit from a terminal.

For this reason, as of today, there are still no price lists in the dealerships of the different brands to be able to sell starting Tuesday, after tomorrow’s holiday.

Only toyota communicated to the network the strategy to follow. Normally, the Japanese terminal is the first to publish its price list

“They sent us a list with an increase of around 20% for the pickup and they will inform us how the prices of the rest of the models are when the decree is published in the Official Gazette,” they said from a dealership of the Japanese automaker.

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Distortion. While the cheapest 0km on the market already cost more than $4,000,000, models starting at $7,000,000 have to pay the “luxury” tax.

The differentiation is due to the fact that pickups, like all commercial vehicles, do not pay Internal Revenue, so the tax change does not impact their price.

It is possible that other brands that sell pickups and utility vehicles are communicating the same decision to their networks and postponing the increases for the range of cars for a few days.

The impact of the tax is not a minor issue since today all prices are distorted by this tax. By suspending it, the models that are “capped” will have more room to increase, while those that already pay will benefit from the tax reduction.

In a context of lower inflation,Removing a 20% tax burden (which impacts 25% on the real value to the public) would have a visible impact, but taking into account that the cost of living index for December is going to be 25% or more, what may happen is that the tax benefit mitigates the rise. In any case, everything will depend on the strategy of each brand.

“We must keep in mind that the revenue it generates is not important but that it was applied to stop the outflow of dollars. If they do not make a change, the revenue will fall more because car sales will collapse,” they said from a automotive.

The Government was working throughout last week on a modification to the Internal Tax regime so that fewer cars are affected. The information was confirmed “off” by official sources.

Through a decree, the tax base can be changed and the majority of the 0km are outside the tax without altering the general rule.

It is a solution similar to the one applied at the beginning of the management of Mauricio Macri, in January 2016, when it eliminated the first scale and lowered the second, which was from 50% to 35%, as it prevails until today. In this way, he reversed what was done by the government of Cristina Fernández de Kirchner.

Alberto Fernandezin 2019, re-implemented the pre-Macri scheme, which is the one in force, although it maintained the second scale at 35%.

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Presidency of the Nation

As he was able to find out Ambit, the draft decree being worked on will suspend the first scale of this tax starting in January. The suspension will be temporary and the decision that needed to be made was whether the impasse will be for three or six months.

A modification was also analyzed for the second scale, which corresponds to vehicles above the $27,000,000. The idea was not to suspend it as well but to lower the percentage of the rate paid so that the models become less expensive and which today is 35%. But this change is not confirmed and the scheme can be maintained as it is today.

The evaluation of the duration of the suspension has to do with the period that the Government considers critical due to the high inflation that is expected.

It must be taken into account that the current adjustment of the tax base is carried out quarterly, taking the increase in the cost of living from the previous three months. Today the update that was made on December 1 is in force by law and the next correction would have to be made in March. To modify this form of updating, another law is required. Not to modify or suspend the scales.

Once this period has expired, it will be evaluated whether it is necessary to extend it or return to the current scheme, depending on the inflationary situation.

“The idea is to temporarily carry out and then analyze a possible change in the law. The issue today is to solve the price disorder that exists due to the cap imposed by the tax.”the Government explained to this medium.

The final decision on the details of the decree has not been made and depends on the approval that comes from the Minister of Economy, Luis Caputo and, obviously, from Milei, so it could undergo changes.

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