To be or not to be... a Monotributario

[Shpongle]

It seems with the recent Ley Bases amendments to the monotributo and Bienes Personales tax regimes, it is possible to live an affordable life in Argentina without being taxed into an early grave.

Q1. As I understand it,as of 1 August 2024, even at the maximum category K of the monotributo system, one pays (at best, i.e. when maximising income to 68M) just 13% income tax for service industry work (735.000 * 12 installments = 8.820.000 on an income up to 68.000.000). Add obra social at 47.000 * 12 = 564.000 in the year, pension 85.000 * 12 = 540.000.
To me this seems reasonable by global standards, given Argentina's horrific income tax reputation in recent years...
Am I misinterpreting this, are there other figures involved? What have I missed?

Q2. Are there any obvious exclusions to the monotributario system that would exclude someone who is a freelance IT professional?

Q3. Does anyone know if it is possible to engage in production of both physical goods AND services under this regime?

Please could only those who are self-employed and operate as a monotributario reply, or those with professional tax experience -- thanks.

 

[FrankPintor]

It seems with the recent Ley Bases amendments to the monotributo and Bienes Personales tax regimes, it is possible to live an affordable life in Argentina without being taxed into an early grave.

Q1. As I understand it,as of 1 August 2024, even at the maximum category K of the monotributo system, one pays (at best, i.e. when maximising income to 68M) just 13% income tax for service industry work (735.000 * 12 installments = 8.820.000 on an income up to 68.000.000). Add obra social at 47.000 * 12 = 564.000 in the year, pension 85.000 * 12 = 540.000.
To me this seems reasonable by global standards, given Argentina's horrific income tax reputation in recent years...
Am I misinterpreting this, are there other figures involved? What have I missed?

Q2. Are there any obvious exclusions to the monotributario system that would exclude someone who is a freelance IT professional?

Q3. Does anyone know if it is possible to engage in production of both physical goods AND services under this regime?

Please could only those who are self-employed and operate as a monotributario reply, or those with professional tax experience -- thanks.

Q1: my understanding is that you're correct, my tax accountant changed my category at AFIP based on the latest changes. If there's a catch, I haven't found it yet. I haven't done the obra social thing yet so I'm missing out on a bit, but I jumped through so many hoops with OSDE not to want to go there.

Q2: not that I know of. You would be working with international clients? You can bring money in up to a certain limit (used to be USD12k per year, not sure now) via SWIFT transfer to your USD account here. Alternatively, several users here have posted on how to bring money (USD) in via bank transfer and CCL, AFIP converts this to Pesos at the official rate, and everyone's happy

Q3: I have no idea, I only declare services.

 

[fein]

Q1: Adding to Frank's answers: You can stay in a “prepago” like OSDE and have the contribution to the obra social paid towards your private health insurance. So, while you’d be paying the 47,000 ARS with your monotributo, you’d get a discount on your OSDE bill (or Swiss Medical, etc.).

Q2: The only catch I’m aware of is that you’re not allowed to import under a monotributo. So if you wanted to sell goods that you import, you wouldn’t be able to do that with this tax category.

Q3: I haven’t done that myself either, but you can register for up to two categories. One could match your IT services, and the other could cover the sale of goods. So this should be possible.

 

[FrankPintor]

Q1: Adding to Frank's answers: You can stay in a “prepago” like OSDE and have the contribution to the obra social paid towards your private health insurance. So, while you’d be paying the 47,000 ARS with your monotributo, you’d get a discount on your OSDE bill (or Swiss Medical, etc.).

Yes, absolutely correct, you explained it better than me

 

[LuckyLuke]

It seems with the recent Ley Bases amendments to the monotributo and Bienes Personales tax regimes, it is possible to live an affordable life in Argentina without being taxed into an early grave.

Q1. As I understand it,as of 1 August 2024, even at the maximum category K of the monotributo system, one pays (at best, i.e. when maximising income to 68M) just 13% income tax for service industry work (735.000 * 12 installments = 8.820.000 on an income up to 68.000.000). Add obra social at 47.000 * 12 = 564.000 in the year, pension 85.000 * 12 = 540.000.
To me this seems reasonable by global standards, given Argentina's horrific income tax reputation in recent years...
Am I misinterpreting this, are there other figures involved? What have I missed?

Howdy Shpongle,

It's my understanding that the highest level for private sector Monotributistas rendering services is Category H. Above that you would have to register as a separate classification of business activity which would carry additional taxes. This is touched on here:

¿Cuál es mi categoría?

Enterate cómo conocer cuál es la categoría de tu asociación civil.

www.argentina.gob.ar

I don't fully understand the ins and outs of that, this is simply what our accountant explained to me at the time we registered.

The monthly income tax contributions for Categories A - H vary from 5% - 7.65%, much lower than 13% by my math.

 

[Quilombo]

Q2. Are there any obvious exclusions to the monotributario system that would exclude someone who is a freelance IT professional?

Yes, you are still subject to the byzantine process of bringing in your earnings legally. This means, and again, I'm not a lawyer/accountant:

- You have to emit Factura E invoices
- ALL your income must enter Argentina within 5 business days of being paid
- This is done via the MULC and SWIFT
- The SWIFT fee is often $40 USD sneding out from your foreign bank, and between $50 USD to 1.8% from your Argentine bank to receive it here
- The first $24,000 USD is exempt from the obligation to pesify (it was doubled this year after some LLA Twitter trolls @ed Milei complaining)
- Anything after $24,000 MUST be pesified, and you still end up paying all those SWIFT fees (often at least $100 USD per transaction)
- You get pesified at the comprar BNA exchange rate IIRC (today, 920 ARS per dollar, the worst exchange rate) Some businesses have been getting a "blended CCL rate" per a DNU in the Boletin Official, but they export things, and I don't know of a single person that legally pesifies their foreign income via the MULC so I can't comment if it applies to individuals as well
- If you need pesos with your 24K USD, you can sell them for pesos via the MEP market and get a better rate

Howdy Shpongle,

It's my understanding that the highest level for private sector Monotributistas rendering services is Category H. Above that you would have to register as a separate classification of business activity which would carry additional taxes. This is touched on here:

With the updates to the Monotribuista regime, the law changed unifying both services and goods under a single scale, A-K. There is no longer a limit on the providers of services being excluded from the highest categories as was the case previously https://www.afip.gob.ar/monotributo/categorias.asp.

 

[fein]

Yes, you are still subject to the byzantine process of bringing in your earnings legally. This means, and again, I'm not a lawyer/accountant:

- You have to emit Factura E invoices
- ALL your income must enter Argentina within 5 business days of being paid
- This is done via the MULC and SWIFT
- The SWIFT fee is often $40 USD sneding out from your foreign bank, and between $50 USD to 1.8% from your Argentine bank to receive it here
- The first $24,000 USD is exempt from the obligation to pesify (it was doubled this year after some LLA Twitter trolls @ed Milei complaining)
- Anything after $24,000 MUST be pesified, and you still end up paying all those SWIFT fees (often at least $100 USD per transaction)
- You get pesified at the comprar BNA exchange rate IIRC (today, 920 ARS per dollar, the worst exchange rate) Some businesses have been getting a "blended CCL rate" per a DNU in the Boletin Official, but they export things, and I don't know of a single person that legally pesifies their foreign income via the MULC so I can't comment if it applies to individuals as well
- If you need pesos with your 24K USD, you can sell them for pesos via the MEP market and get a better rate

That’s correct to my knowledge. However, I think that most IT freelancers don’t worry too much about that 12k—now 24k—limit. I’ve heard that using crypto is very popular among monotributistas to get around it. Whether it’s legal or not, many seem to go down that route.

With the updates to the Monotribuista regime, the law changed unifying both services and goods under a single scale, A-K. There is no longer a limit on the providers of services being excluded from the highest categories as was the case previously https://www.afip.gob.ar/monotributo/categorias.asp.

That’s my understanding too. Category K is now the highest category for both providing services and selling goods.

 

[Shpongle]

Howdy Shpongle,

It's my understanding that the highest level for private sector Monotributistas rendering services is Category H. Above that you would have to register as a separate classification of business activity which would carry additional taxes. This is touched on here:

¿Cuál es mi categoría?

Enterate cómo conocer cuál es la categoría de tu asociación civil.

www.argentina.gob.ar

I don't fully understand the ins and outs of that, this is simply what our accountant explained to me at the time we registered.

The monthly income tax contributions for Categories A - H vary from 5% - 7.65%, much lower than 13% by my math.

Howdy Luke,

Thanks for bringing this second order of categorisation to my attention. I had no idea until you mentioned it.
It moderately annoying that even though I read numerous (including official AFIP) sources on the monotributo, I saw nothing about this until now.

Hi Quilombo, to be clear then, what Luke has mentioned is no longer in force / vigente?

 

[LuckyLuke]

Yes, you are still subject to the byzantine process of bringing in your earnings legally. This means, and again, I'm not a lawyer/accountant:

- You have to emit Factura E invoices
- ALL your income must enter Argentina within 5 business days of being paid
- This is done via the MULC and SWIFT
- The SWIFT fee is often $40 USD sneding out from your foreign bank, and between $50 USD to 1.8% from your Argentine bank to receive it here
- The first $24,000 USD is exempt from the obligation to pesify (it was doubled this year after some LLA Twitter trolls @ed Milei complaining)
- Anything after $24,000 MUST be pesified, and you still end up paying all those SWIFT fees (often at least $100 USD per transaction)
- You get pesified at the comprar BNA exchange rate IIRC (today, 920 ARS per dollar, the worst exchange rate) Some businesses have been getting a "blended CCL rate" per a DNU in the Boletin Official, but they export things, and I don't know of a single person that legally pesifies their foreign income via the MULC so I can't comment if it applies to individuals as well
- If you need pesos with your 24K USD, you can sell them for pesos via the MEP market and get a better rate



With the updates to the Monotribuista regime, the law changed unifying both services and goods under a single scale, A-K. There is no longer a limit on the providers of services being excluded from the highest categories as was the case previously https://www.afip.gob.ar/monotributo/categorias.asp.

Thank you Quilombo, for clarifying that.

I asked our accountant above having to wire funds in and was told that it wasn't enforced. Our Factura E is based on our total Western Union costs for the month. Beyond that we were told AFIP is not concerned about the exchange rate we ultimately "sold" the dollars at (i.e. the amount of the transfer our bank down here received from WU). Our category is therefore not based on the peso amount received, but rather at the dollar amount we invoiced multiplied by the oficial rate. I have several argentine associates paid in dollars who factura AFIP the same but using dollars earned/sold via Payoneer instead of WU.

 

[Quilombo]

Howdy Luke,

Thanks for bringing this second order of categorisation to my attention. I had no idea until you mentioned it.
It moderately annoying that even though I read numerous (including official AFIP) sources on the monotributo, I saw nothing about this until now.

Hi Quilombo, to be clear then, what Luke has mentioned is no longer in force / vigente?

Correct, it was repealed this year, but was the prevailing law previously.

Thank you Quilombo, for clarifying that.

I asked our accountant above having to wire funds in and was told that it wasn't enforced. Our Factura E is based on our total Western Union costs for the month. Beyond that we were told AFIP is not concerned about the exchange rate we ultimately "sold" the dollars at (i.e. the amount of the transfer our bank down here received from WU). Our category is therefore not based on the peso amount received, but rather at the dollar amount we invoiced multiplied by the oficial rate. I have several argentine associates paid in dollars who factura AFIP the same but using dollars earned/sold via Payoneer instead of WU.

As I said, I'm not an accountant nor a lawyer, and yes, AFIP is more interested in getting people pay something via being monotribuistas than be fully en negro, but the issue I'd caution you and others with, which your accountant may or may not have told you, is that you are making fines, intimations, and even criminal prosecution very easy for AFIP and the UIF should they ever decide to actually enforce the laws (even years from now, and I've been reading cases in which they do this) or if you get connected to someone/their CUIT/L that is investigated for violation.

For example, you've created a direct paper/electronic trail demonstrating that you violated MULC regulations, falsified invoices (Factura "E" are not supposed to be issued in the manor you described), violated the regulations of the Monotribuista regime itself, and also violated WesternUnion's end user agreement for Argentina, including rules imposed on them by AFIP/UIF itself, and these are just to name a few.

Now, all that being said, I'm not suggesting you should panic or fire your accountant tomorrow morning or brace for a knock at your door by the UIF; my objective isn't to scare you or Shpongle or others; I honestly don't condone or condemn these kinds of practices in Argentina and am well aware that virtually no tech workers are fully en blanco, but I do think it's like recreational drug use or gambling: you should know the laws, the potential consequences of engaging in these practices, and review your tolerance for risk. Do I think you'll ever get caught? I'm a gambling man, and I wouldn't bet on it, but you've made it easier for them to throw the book at you if you do.

Hopefully once the cepo goes away so will the requirement to settle via the MULC and people can simply issue Factura E invoices and pay their taxes accordingly without the need for every bank to get a cut, and workers to lose 20% of their salary to the distortions caused by capital controls.