Level of Violence in Buenos Aires?

A buddy and I are thinking about starting up a Locutorio or an internet cafe in Centro within a few months. We've been about a year researching it, looking at the possibility of buying existing businesses, talking to engineers and salesmen from IPlan, accountants, etc.

The one thing that everyone agrees on, that everyone does, and that everyone knows about, is how they declare their income and their liabilities to the government.

The only things that these types of businesses pay taxes on related to sales is their phone calls, or if they have RapiPago or Pago Facil (or something similar). These are items that they cannot get out of paying taxes on because they earn a commission, a percentage of what they take in for phone calls, payments, etc. It's all recorded and reported to AFIP.

Everything else is mostly off the books. Computer time is often never reported for calculations of ingreso bruto. If it is reported, it's only a fraction of what is brought in that's reported. Kiosco items are often not reported (at a locutorio anyway - I'm not talking about just a kiosco - I don't know).

If they have an employee, they pay that person minimum wage in the white. They usually pay another 800-1000 pesos a month in the black.

They take every opportunity they can to hide what they are making from the government.

It makes it very difficult to determine what a location's real income is when looking at buying it, and determine what kind of margin is available in that business as a result. Just another thing about doing business here - as someone else mentioned, many of the costs are hidden, as well as the income itself.

To get back to the actual thread topic - I wouldn't worry about the crime in BA any more than LA or New York. At first you won't necessarily be able to tell the good parts of town from the not so good parts (it's not always about how much trash is on the street, for example), so yo will tend to be more careful everywhere until you understand the city better, if you're smart. Shouldn't have any more problems than the rest of us anyway :)
 
But that poses an interesting point of discussion. So many businesses do hide their income that those that don't are stuck paying the lions share of the taxes. Which just sucks.

We are (right now) a small business but as we adhere to GAAP and are audited annually by E&Y - everything is done by the book. We pay out every penny to the gov't required by law and 100% of our employees salaries are en blanco, etc.

I understand why people hate giving their money over (and to be honest, I don't trust the gov't here to use it in a legit manner) but it becomes a vicious circle. If the majority of businesses don't pay their fair share, the gov't keeps raising taxes which makes people even less inclined to be honest which decreases the revenue steam which makes the gov't raise taxes even more, ad nauseum.

Eh.. sorry, taking this off-topic but it might make an interesting thread.
 
I spent 2 weeks here last October and had my purse stolen around noon in a very nice cafe in a very nice place...Belgrano. I knew not to hang it over the back of the chair but put it between my feet...bad idea. Two older,well dressed men sat behind me and snagged it from under my chair...they didn´t order anything and left quickly according to the people around me. They got my nice digital camera, passport (dumb me for carrying it) and about us$100.
Why am I back here again? Because four very lovely people came forward to help me and one college student walked me to the police station and interpreted for 2 hours and thanked ME for a 2 hour English lesson!. (We are now Facebook friends.)The funny thing was, the woman I was traveling with had ourwaiter take a photo with her disposable camera and when we got the pictures back at home...there were the 2 guys, looking right in the picture. Mailed it to the police station along with a copy of the report but of course I haven´t heard anything and don´t expect to in the future. So, violence...maybe...I.ve heard a lot of stories but I think it´s more like what I experienced. So be very, very careful and carry your purse across your shoulder and keep it in your lap at all times...hope this helps.
Christy
 
citygirl said:
I understand why people hate giving their money over (and to be honest, I don't trust the gov't here to use it in a legit manner) but it becomes a vicious circle. If the majority of businesses don't pay their fair share, the gov't keeps raising taxes which makes people even less inclined to be honest which decreases the revenue steam which makes the gov't raise taxes even more, ad nauseum.

But the vicious circle is created by the government which makes it hard/almost impossible to do business here. Instead of stimulating the economy by making it easier for small business they cut their own throat by making it ridiculous.

Case in point.

My father in law even had to pay some sort of tax as a penalty for using "too much" energy, but he used more energy because he was growing his business. Or at least trying to grow his business. And then he got absolutely robbed trying to get rid of bad employees who were screwing him over. And he runs his business completely en blanco. But now thinks he has been honorable but stupid for doing so.

It's a no win situation.
 
The official tax rate for a corporation in Argentina, once everything has been taken into account - ingresos brutos, payroll, IVA, everything - is 114% of gross sales.
 
My father in law even had to pay some sort of tax as a penalty for using "too much" energy
I believe this has nothing to do with the govt. (not that I am defending them, um Gottes Willen!) but with the power supplier. And it is quite a common thing througout the World. Businesses pay a certain connection "size" to put it clearly. And the power supplier guarantees you this power anytime (or as agreed). Then they use this information (together with the information from all other big consumers) to plan how and when a power plant will go online or shutdown.
That's why they have penalties.
 
ElQueso said:
A buddy and I are thinking about starting up a Locutorio or an internet cafe in Centro within a few months. We've been about a year researching it, looking at the possibility of buying existing businesses, talking to engineers and salesmen from IPlan, accountants, etc.

If they have an employee, they pay that person minimum wage in the white. They usually pay another 800-1000 pesos a month in the black.

They take every opportunity they can to hide what they are making from the government.

It makes it very difficult to determine what a location's real income is when looking at buying it, and determine what kind of margin is available in that business as a result. Just another thing about doing business here - as someone else mentioned, many of the costs are hidden, as well as the income itself.

This is not just in Argentina; it applies to small businesses in Norway, Germany, and the UK (speaking from first-hand experience). One small business in Oslo -- along the lines of what you are discussing -- had seven employees but only showed three on the books.

The difference in Argentina is endemic bureaucratic sloth, indifference and corruption and political incompetence and corruption.

Any new place you go to and you are not connected, have no insider to guide you or grease your way, whose culture you have no prior acquaintance with, you are going to lose money in a new business. It doesn't matter if it's Norway, Argentina, or the USA.

Anyway, the first post in this thread was probably a joke -- start a business and meet some Argentinian girls -- *snort of derision*.
 
Wow!
Thanks, guys! Really good info!
I guess what I should have said was "I am looking for new assignments in Buenos Aires as I am a independent consultant with my corporation based based out of New Zealand and Nevada".
My website is http://www.charliebluehawk.com.
I was not planning on trying to deal with all the political and banking schemes directly, just looking for contracts with business based in Buenos Aires, and leaving my business base off shore.
But again, thanks for all the really excellent info!
Charlie
 
I started a new business a year ago and opened a bank account for it so I could take accept credit cards.
Not one of my best decisions. At the moment I am simply running the business to keep ahead of the bank charges, ingresos brutos which they take out auomatically and the scandalous charges for using the Lapos card machine.
I'm considering closing the account and reverting to cash only. I pay my taxes here, but I'm really annoyed that the world and his aunt has access to my bank account, dipping in when they feel like it.
I might add that I haven't taken a penny out of my account yet, but others have. Read the small print with a spyglass.
 
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