Monotributo Vs. Small Company

[Girino]

Hello, I was wondering if someone ever researched on the topic monotributo vs. opening a small company in Argentina.
What are the pros and cons? Are there significant differences on taxation?

 

[TWB103]

Montributo all the way. Its a good deal financially and its easy to deal with which is the whole point of it.

Being IVA registered is more complicated to manage and is more for larger big income multipersonel businesses.

 

[r2d2]

Agree with TWB103. You pay less taxes with the monotributo. And it is a simplified system. Besides not collecting IVA there are also little tax declarations you need to make - and just one monthly payment that includes all federal taxes and social security (SIPA, Obra Social) etc.
Only downside of the monotributo is that you can not import with your business.

 

[Girino]

Agree with TWB103. You pay less taxes with the monotributo. And it is a simplified system. Besides not collecting IVA there are also little tax declarations you need to make - and just one monthly payment that includes all federal taxes and social security (SIPA, Obra Social) etc.
Only downside of the monotributo is that you can not import with your business.

It being a service business, the importing limitations would not affect it. I was just wondering if, for example, ductibles are different in both cases.

If I buy a computer, can I deduct it from my gross income either as a monotributo and as a company?

 

[TWB103]

It being a service business, the importing limitations would not affect it. I was just wondering if, for example, ductibles are different in both cases.

If I buy a computer, can I deduct it from my gross income either as a monotributo and as a company?

The point of the monotributo system is that you are not involved with the IVA side of things. So if I understand your question correctly as a monotributista you wont be able to reclaim the sales tax on business equipment purchases services or anything.

 

[r2d2]

The point of the monotributo system is that you are not involved with the IVA side of things. So if I understand your question correctly as a monotributista you wont be able to reclaim the sales tax on business equipment purchases services or anything.

Exactly. Monotributo is simplified so you just pay a flat monthly tax based on your revenue (ingresos brutos) category and based on the fact if you sell goods or services (tax for services is slightly higher). No collecting IVA from sales, no deducting IVA from purchases, no tax declarations with deductions. Easy Peasy! It is all factored into the flat monthly tax you pay.

If you register for another tax regimen like Responsable Inscripto you can declare those deductions.

 

[gpop]

Exactly. Monotributo is simplified so you just pay a flat monthly tax based on your revenue (ingresos brutos) category and based on the fact if you sell goods or services (tax for services is slightly higher). No collecting IVA from sales, no deducting IVA from purchases, no tax declarations with deductions. Easy Peasy! It is all factored into the flat monthly tax you pay.

If you register for another tax regimen like Responsable Inscripto you can declare those deductions.

Is that right though? My wife is a psychologist > monotributista and pays the flat monthly rate whether she earns anything or not.
And isn't monotributista a category for licensed professional services as opposed to a PYME category?

 

[Girino]

Exactly. Monotributo is simplified so you just pay a flat monthly tax based on your revenue (ingresos brutos) category and based on the fact if you sell goods or services (tax for services is slightly higher). No collecting IVA from sales, no deducting IVA from purchases, no tax declarations with deductions. Easy Peasy! It is all factored into the flat monthly tax you pay.

If you register for another tax regimen like Responsable Inscripto you can declare those deductions.

Monotributo seems pretty funny to me: you don't declare how much you earn, you just pay taxes accordingly. But when you have to present tax documents to prove you can financially support yourself and your family, how do you do?
I am thinking about countries or instances where you have to prove your earnings to immigrate / get a loan, etc. What would prove a paper where it is stated that I paid a certain amount because I earned between X and Y, where the highest range is 26 k USD/year gross (not very much for living abroad!).


Anyway, the highest category for services is hasta 400.00 pesos (26 k USD), what happens after that?

 

[r2d2]

Is that right though? My wife is a psychologist > monotributista and pays the flat monthly rate whether she earns anything or not.

You pay the monotributo (tax & social security) based on your revenue over the last 12 month. Every 4 months you need to check if you are still in the correct category. If it has changed then you switch to a different category. So if you earn nothing or very little you will end up in the lowest category and your monthly flat payment will be a lot lower than somebody in a higher category.

And isn't monotributista a category for licensed professional services as opposed to a PYME category?

No, many small businesses use the monotributo.

 

[r2d2]

Monotributo seems pretty funny to me: you don't declare how much you earn, you just pay taxes accordingly. But when you have to present tax documents to prove you can financially support yourself and your family, how do you do?
I am thinking about countries or instances where you have to prove your earnings to immigrate / get a loan, etc. What would prove a paper where it is stated that I paid a certain amount because I earned between X and Y, where the highest range is 26 k USD/year gross (not very much for living abroad!).


Anyway, the highest category for services is hasta 400.00 pesos (26 k USD), what happens after that?

You do not declare how much you earn but you select the revenue category you are in. So if you are for example in category F they know you earn more than 144.000 and up to 192.000 per year. To prove your income you usually present your inscription in the monotributo which states your category and the last pay slips for your monotributo payments. If you earn more than 400.000 with services then you can no longer use the monotributo.