Economic Storm Clouds Brewing for Argentina?

[dennisr]

This is crazy, herd mentality is at work.

http://www.cronista.com/contenidos/2012/05/23/noticia_0055.html

 

[nicoenarg]

This is crazy, herd mentality is at work.

http://www.cronista.com/contenidos/2012/05/23/noticia_0055.html

You surprised?

Rule # 1: Do not try to control the flow of US Dollars in a country where you screwed the people over in relation to US Dollars within the last 10-12 years. People will panic. Whether it makes sense or not, they will.

Rule # 2: If your currency sucks the darkest hole made on man, do not take steps to tell your populace that it really sucks. You controlling dollars like maniacs shows that you don't even think your currency is worth anything.

Rule # 3: If you do try to control US dollar flow and take away people's economic liberty, you and the country you rule is effectively effed.

PS: The above only holds true for Argentina. Not speaking for the rest of the world.

 

[LostinBA]

EXACTLY. I know many expats have been saying "the sky is falling" for many years. I disagreed with these forecasts years ago. But Argentina in 2012 isn't the same as Argentina just a few years ago. Just look at all the new restrictions and laws coming in place the last several months that weren't here before. That's a tell tale sign of the desperation.

You have to really be burying your head in the sand to deny there are severe severe problems in Argentina now and it's NOT a great place for foreigners to invest right now. I'm not saying there probably aren't opportunities to invest and make money. I just stand by my call that the risk/reward ratio for the vast majority of investments there aren't going to be good. Especially considering that Argentina doesn't have a working judicial system in case there are problems or disputes.

It's not even about nationalization fears. That is the furthest worry for small companies. It's just about survival due to all the controls and red tape involved with doing business in Argentina. Argentina, if you are running your business completely legal and white and paying all taxes is a VERY difficult country to make money in. That's the plain truth.

A couple of years ago while at a friend's bbq in San Isidro, I asked a small group of businessmen from various sectors, mostly successful Argentina entrepreneurs with many employees, whether they paid and complied with all the state rules and taxes. They laughed and told me that if they were to pay all taxes, had everything in white and 'legal', they'd be out of business very quickly. And this was BEFORE the currency and import controls. Us foreigners are just learning what they've always known.

 

[el_expatriado]

A couple of years ago while at a friend's bbq in San Isidro, I asked a small group of businessmen from various sectors, mostly successful Argentina entrepreneurs with many employees, whether they paid and complied with all the state rules and taxes. They laughed and told me that if they were to pay all taxes, had everything in white and 'legal', they'd be out of business very quickly. And this was BEFORE the currency and import controls. Us foreigners are just learning what they've always known.

I don't think any business in Argentina pays everything it owes in taxes. People do the best to pay what they can, depending on the business they are in.

The World Bank did a study and if you paid all your taxes and had 100% of your entire operation in white in Argentina you would pay 108% of your profits each year in taxes. So, if you count all the taxes that Argentina has, it is impossible for a business to actually make a profit. It would have an 8% loss each year.

That's the reality here. People do what they can and pay what they are able. I think very few people here are either 100% in black or 100% in white. What you have are shades of grey.

 

[earlyretirement]

I don't think any business in Argentina pays everything it owes in taxes. People do the best to pay what they can, depending on the business they are in.

The World Bank did a study and if you paid all your taxes and had 100% of your entire operation in white in Argentina you would pay 108% of your profits each year in taxes. So, if you count all the taxes that Argentina has, it is impossible for a business to actually make a profit. It would have an 8% loss each year.

That's the reality here. People do what they can and pay what they are able. I think very few people here are either 100% in black or 100% in white. What you have are shades of grey.

I've also seen that study a few years ago. It is accurate. Even the very biggest companies don't operate 100% in white. Even if you wanted to operate 100% in white, sometimes it's just difficult to.

What sucks when you operate almost all in white is you have a severe competitive disadvantage compared to all your competitors that are mostly working in black. I'd encounter that all the time as we were working in white and almost everyone else was in black. Their operating costs and salaries were a fraction of ours.

And the thing that really sucks about operating in white is once you do and enter the radar and system of AFIP it's almost impossible to go back and then operate in black.

Everything is kind of ass backwards in Argentina. You can be paying huge taxes each year and then AFIP will ask for even more. Yet the other guys that aren't paying any taxes and never have... AFIP doesn't even go after them as they aren't in the system or on their radar. I do think that is changing as AFIP is wising up...

The only small consolation to operating in white is that you don't have to really work in fear of AFIP. Years ago I remember our office got audited by AFIP and the inspector was actually very surprised that our books were in order. He said that wasn't typically the case and I had the feeling some of these guys asked for kickbacks.

 

[el_expatriado]

Years ago I remember our office got audited by AFIP and the inspector was actually very surprised that our books were in order. He said that wasn't typically the case and I had the feeling some of these guys asked for kickbacks.

I had an accountant once who was trying to win my business tell me an AFIP inspector was in Disneyland with his two kids on his client's dime to fix an inspection. He bragged about how his client was paying pennies on the dollar as to what he would have owed had he not been the accountant on the case and not able to fix the issue with his contact in AFIP.

I told the story to my lawyer and he said this is typical... the accountant is also corrupt and working with AFIP. The accountant tells the AFIP which of his clients to audit and then "fixes" the problem he created.

If you are 100% in white you don't have to worry about any of these problems.

 

[GS_Dirtboy]

Don't go to the Dark Side.

 

[citygirl]

I don't think any business in Argentina pays everything it owes in taxes. People do the best to pay what they can, depending on the business they are in.

The World Bank did a study and if you paid all your taxes and had 100% of your entire operation in white in Argentina you would pay 108% of your profits each year in taxes. So, if you count all the taxes that Argentina has, it is impossible for a business to actually make a profit. It would have an 8% loss each year.

That's the reality here. People do what they can and pay what they are able. I think very few people here are either 100% in black or 100% in white. What you have are shades of grey.

We are 100% in white and yes you can make a profit. Not a big one mind you, but you can be profitable.

Some of the taxes they list on there are not applicable to all busineses.

And don't get me started on the tax avoidance - if every business paid their taxes, the overall tax burden on all businesses would be so much lower. Instead, a small portion do what is right and bear an unduly heavy burden.

It irks me to no end.

 

[Johnny]

Here's a link to the Oppenheimer report from yesterday's Miami Herald. I've always found Oppenheimer to be a pretty even handed fellow, not too far right or left. He does a good job of wading through the politics and economic woes in Latin America.

Here's his take on Argentina at the moment. Not surprising.

http://www.miamiherald.com/2012/06/16/2851968/argentinas-economic-fiesta-is.html

 

[Gringoboy]

Pretty gloomy stuff Johnny, but he does hit the buttons.
It's a sobering thought to be reminded that CFK still has so much time left as President of this country.