Villarruel breaks tie in Argentina’s Senate to approve Milei’s flagship Ley Bases

[Ries]

I would recommend that Milei look at the way Norway taxes the companies it lets do raw materials extraction-

Norway​

Corporate - Taxes on corporate income​

Last reviewed - 23 January 2024
A Norwegian resident company is, as a starting point, subject to corporate income tax (CIT) on its worldwide income. Non-resident companies are, as a starting point, liable for CIT in Norway when engaged in a business that is either conducted in or managed from Norway.
CIT is, in general, assessed at a rate of 22%. Certain companies within the financial sector are assessed at a CIT rate of 25%.
As a general rule, income is taxable when the right to receive it arises and costs are deductible when the liability to cover the costs arises. The actual payment is generally not relevant.

Petroleum tax regime​

All upstream petroleum activity on the Norwegian Continental Shelf (NCS) is taxable to Norway.
Taxation is based on net income at a marginal tax rate of 78%, which comprises the ordinary 22% CIT rate and a 56% special tax. All income is subject to 22% CIT, while only income from offshore production and pipeline transportation of petroleum on the NCS (offshore tax regime) is subject to the additional 56% special tax.
Following the 2022 shift to a ‘sequential’ tax system, tax on upstream petroleum tax activities is calculated in two steps. Firstly, the tax in the ordinary 22% tax base is calculated. The resulting tax amount is then deducted from the special tax base, on which a ‘technical special tax rate’ of 71.8% is applied in order for the overall effective tax rate to remain 78%:

 

[antipodean]

I would recommend that Milei look at the way Norway taxes the companies it lets do raw materials extraction-

Norway​

Corporate - Taxes on corporate income​

Last reviewed - 23 January 2024
A Norwegian resident company is, as a starting point, subject to corporate income tax (CIT) on its worldwide income. Non-resident companies are, as a starting point, liable for CIT in Norway when engaged in a business that is either conducted in or managed from Norway.
CIT is, in general, assessed at a rate of 22%. Certain companies within the financial sector are assessed at a CIT rate of 25%.
As a general rule, income is taxable when the right to receive it arises and costs are deductible when the liability to cover the costs arises. The actual payment is generally not relevant.

Petroleum tax regime​

All upstream petroleum activity on the Norwegian Continental Shelf (NCS) is taxable to Norway.
Taxation is based on net income at a marginal tax rate of 78%, which comprises the ordinary 22% CIT rate and a 56% special tax. All income is subject to 22% CIT, while only income from offshore production and pipeline transportation of petroleum on the NCS (offshore tax regime) is subject to the additional 56% special tax.
Following the 2022 shift to a ‘sequential’ tax system, tax on upstream petroleum tax activities is calculated in two steps. Firstly, the tax in the ordinary 22% tax base is calculated. The resulting tax amount is then deducted from the special tax base, on which a ‘technical special tax rate’ of 71.8% is applied in order for the overall effective tax rate to remain 78%:

What similarities and differences exactly between Norwegian/ generic OECD corporation tax models and what Milei is already proposing should be looked at?

A lower corporate tax (currently 35% in Argentina since around 2021 when Alberto put it up from 30%….) to 25% or 22% would be welcome, but for that workers and pensioners are going to finally need to start paying income tax to do their bit for the state coffers from very low thresholds as in Norway, remembering that there even the “poor” pay income taxes (as in most other OECD countries…)

 

[Ries]

The Norwegians are taxing the natural resource extraction companies 78%, not 25%.
And Norwegian income tax rates for people making approx $27,000 or less are 1.7%.

the Argentine tax system already disproportionately taxes the poor. The VAT tax is quite high, double Japan or the equivalent state sales taxes in the USA, for example. And thats a very regressive tax. As a percentage of tax revenue to the government, employee taxes are already pretty inline with places like the US, Norway, or Japan.
What Argentina doesnt do is tax the wealthy. Its income taxes today apply to only less than 100,000 citizens, most wealthy people have ways of avoiding taxable income. And its corporate taxes, as a percentage of its total tax income, are quite low compared to most 1st world countries.
Countries with more functional economies tend to have progressive tax brackets on income tax, and enforce corporate taxes. Argentina doesnt really do either.
The charts to look at are the OECD charts of national tax revenue by category of tax. There you can see who is actually paying taxes, not what the nominal tax rates are that people dont actually pay. https://www.oecd.org/tax/revenue-statistics-2522770x.htm

The money is here- there is an estimated $50 Billion in US paper currency in Argentina, and it does not belong to poor people in the conurbano. The wealthy here simply have written the laws to avoid taxation of any kind- no property taxes in most places, no inheritance taxes, no wealth tax to speak of (I have paid bienes and ABL) for more than a decade, and they are a joke)
Milei wants to privatize state industies, again benefitting the wealthy, and has no plans to adjust the tax system to make it more progressive.

 

[antipodean]

The Norwegians are taxing the natural resource extraction companies 78%, not 25%.
And Norwegian income tax rates for people making approx $27,000 or less are 1.7%.

the Argentine tax system already disproportionately taxes the poor. The VAT tax is quite high, double Japan or the equivalent state sales taxes in the USA, for example. And thats a very regressive tax. As a percentage of tax revenue to the government, employee taxes are already pretty inline with places like the US, Norway, or Japan.
What Argentina doesnt do is tax the wealthy. Its income taxes today apply to only less than 100,000 citizens, most wealthy people have ways of avoiding taxable income. And its corporate taxes, as a percentage of its total tax income, are quite low compared to most 1st world countries.
Countries with more functional economies tend to have progressive tax brackets on income tax, and enforce corporate taxes. Argentina doesnt really do either.
The charts to look at are the OECD charts of national tax revenue by category of tax. There you can see who is actually paying taxes, not what the nominal tax rates are that people dont actually pay. https://www.oecd.org/tax/revenue-statistics-2522770x.htm

The money is here- there is an estimated $50 Billion in US paper currency in Argentina, and it does not belong to poor people in the conurbano. The wealthy here simply have written the laws to avoid taxation of any kind- no property taxes in most places, no inheritance taxes, no wealth tax to speak of (I have paid bienes and ABL) for more than a decade, and they are a joke)
Milei wants to privatize state industies, again benefitting the wealthy, and has no plans to adjust the tax system to make it more progressive.

Ríes, it seems understanding non-US taxes is not your strongpoint.
1. The 78% tax referenced in your post includes the basic corporate tax of 22% that applies to almost all tax resident companies (FYI - “CIT” = corporate income tax)
2. The 56% special tax levied on oil and tax has a unique context in Norway: oil and gas makes up 25-35% of the countries entire GDP. It is also a very mature and established industry there meaning they are not exactly needing to attract new investment in the sector.
3. Norway has progressive personal income tax rates, just like Argentina, but don’t forget the hardest taxes in Nordic countries are locally levied taxes as well as social insurance taxes, and not “National” taxes - that 1% doesn’t exist in practice … so Google is deceiving you if you don’t already know what you’re looking for. If you earn say NOK 285 k, you pay around 18% of this in personal income taxes and social insurance taxes.

By the way if one has never submitted a DDJJ to AFIP, one has never paid Bienes Personales in Argentina and are a tax evader… but I guess ignorance of confusing AFIP with AGIP is a fair defense….

 

[Ries]

Ríes, it seems understanding non-US taxes is not your strongpoint.
1. The 78% tax referenced in your post includes the basic corporate tax of 22% that applies to almost all tax resident companies (FYI - “CIT” = corporate income tax)
2. The 56% special tax levied on oil and tax has a unique context in Norway: oil and gas makes up 25-35% of the countries entire GDP. It is also a very mature and established industry there meaning they are not exactly needing to attract new investment in the sector.
3. Norway has progressive personal income tax rates, just like Argentina, but don’t forget the hardest taxes in Nordic countries are locally levied taxes as well as social insurance taxes, and not “National” taxes - that 1% doesn’t exist in practice … so Google is deceiving you if you don’t already know what you’re looking for. If you earn say NOK 285 k, you pay around 18% of this in personal income taxes and social insurance taxes.

By the way if one has never submitted a DDJJ to AFIP, one has never paid Bienes Personales in Argentina and are a tax evader… but I guess ignorance of confusing AFIP with AGIP is a fair defense….

the 78% tax is exactly what I think Argentina should do on lithium, petroleum, and copper exports.
Oil always needs new investment. The current program of upgrades in the Norwegian fields, announced this year, is a half a billion dollars.
Norway DOES have progressive taxes. Argentina does not.
The income tax is, indeed, 1.7%, and on top of income tax, both Norway and Argentina extract social insurance taxes from both employees and employers. different category.
Here, nobody (well, something like 90,000 argentines out of 40 million) pays income taxes.

I have paid Bienes Personales for years, dunno who you are referring to.

again, you are not addressing the actual breakdown of taxes the Argentine government takes in. It is NOT progressive, it is mostly social insurance, VAT, and the ridiculous economy crippling export taxes. Income taxes, corporate taxes, and all kinds of wealth property and insurance taxes are either non-existent or a much smaller percentage of the income to the government than in many comparable countries with similar gross tax income as a percentage of GDP.

You seem to be arguing imaginary ideology of the Austrian school, as opposed to the reality of who pays taxes in Argentina.

 

[antipodean]

Norway DOES have progressive taxes. Argentina does not.
The income tax is, indeed, 1.7%, and on top of income tax, both Norway and Argentina extract social insurance taxes from both employees and employers. different category.
Here, nobody (well, something like 90,000 argentines out of 40 million) pays income taxes.

Wrong. Here is a tax summary in English in case language barrier is an issue about Argentine taxes.

Argentina - Individual - Taxes on personal income

Detailed description of taxes on individual income in Argentina

taxsummaries.pwc.com

Looks pretty progressive to me... the threshold at which income tax becomes liable by law is another issue that was only introduced under Alberto that exempted almost 1.3m wage earners from paying income tax.

Social contributions in Argentina are not included in personal income tax (Ganancia) This is something else entirely.

In case you still have doubts about Norway... make your own calculation.

Skattekalkulator

skattekalkulator.formueinntekt.skatt.skatteetaten.no

I have paid Bienes Personales for years, dunno who you are referring to.

The same Bienes Personales you claimed in a previous thread you were paying to the Provincia of Buenos Aires?

You seem to be arguing imaginary ideology of the Austrian school, as opposed to the reality of who pays taxes in Argentina.

You seem to be imagining I am arguing anything other than facts of Argentine and Norwegian taxation.

 

[ArgentinaVet]

the 78% tax is exactly what I think Argentina should do on lithium, petroleum, and copper exports.

You think exactly like the Kirchneristas, Communists, etc.

This type of thinking is the exact reason why Argentina is a complete economic basket case despite having an abundance of marketable natural resources. The governments of Cuba, Venezuela and Nicaragua have similar thinking and they are also complete poverty devoured basket cases.

I'm an investment professional with two decades of experience in Argentina and I sit at the table on a weekly basis with other investment professionals and big business decision makers both Argentine and foreign. Trust me when I say that fully developing and exploiting the mining and energy industries under the conditions set forth in the RIGI is the only way out of this quagmire.

 

[Ries]

You think exactly like the Kirchneristas, Communists, etc.

This type of thinking is the exact reason why Argentina is a complete economic basket case despite having an abundance of marketable natural resources. The governments of Cuba, Venezuela and Nicaragua have similar thinking and they are also complete poverty devoured basket cases.

I'm an investment professional with two decades of experience in Argentina and I sit at the table on a weekly basis with other investment professionals and big business decision makers both Argentine and foreign. Trust me when I say that fully developing and exploiting the mining and energy industries under the conditions set forth in the RIGI is the only way out of this quagmire.

I actually think like Democrats and Republicans in the USA until the mid 80s. Eisenhower, for example. My own Republican Governor in Washington State in the 70s, Dan Evans.
For the first ten years or so of my life, the top US bracket was 90%, and I saw it drop to 70%, then 50%, then 38%. And I saw the living standards of average americans decline with those percentages
I am sorry, but I dont trust you when you say that .
exploiting mining is being done, globally, in many different ways, with different levels of local participation, labor laws, taxes, and local value added processing, or not.
Its not an either/or proposition- its a negotiated relationship with outside companies, and every negotiation results in different results.
There are oil companies that leave behind polluted desolation and poverty, and, there are others, like the ones in the North Sea, who are forced to make less profit, and that profit goes into supporting the populations that own the resources, and conducting business in ethical and ecologically sustainable ways.

"Investment professionals" are not who makes decisions about what benefits the Argentine people the most. They are concerned with the money.

 

[ArgentinaVet]

there are others, like the ones in the North Sea, who are forced to make less profit, and that profit goes into supporting the populations that own the resources, and conducting business in ethical and ecologically sustainable ways.

You keep referring to Norway as if that is some sort of model that Argentina could even dream of replicating.

Norway has a population of about 5.5 million people, AAA sovereign credit rating, and a culture/society/work ethic that is total different than Argentina.

Argentina has a population of about 48 million, a CCC sovereign credit rating (extreme junk/ shutout of markets), and history of screwing investors.

Statoil controls about 60% of all North Sea oil production and at its peak was about 80% owned by the Norwegian state. Those 78% tax rates you keep referring to are not what you think they are. Statoil is corruption free, run as a true business and as essentially an arm of a AAA rated sovereign, able to borrow money at AAA sovereign (low) interest rates.

YPF has been a total disaster for most of its existence and has the same credit rating as the sovereign and thus can only borrow money at exorbitant rates.

My point is that no money is going to come into Argentina to turn the economy around unless terms are offered to investors that incentivize them to play ball and take the tremendous risk getting involved with Argentina entails. Argentina cannot get out of this quagmire being lead by the state because the state has absolutely no credibility whatsoever among market participants, foreign and domestic.

 

[ArgentinaVet]

El presidente de YPF le advirtió a Kicillof que si no adhiere al RIGI la planta de GNL se instalará en Río Negro

"Si la Provincia no adhiere al RIGI se terminó la discusión, ¿quién va a poner la plata?", afirmó Horacio Marín.

www.lapoliticaonline.com

touche