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Telecoms Firms Ask Argentina To Ease Suffocating Tax Regime

by Mike Godfrey, Tax-News.com, Washington

01 December 2017


The GSM Association, which represents almost 800 mobile operators worldwide, has called for reform of the tax settings for the mobile telecoms sector in Argentina, pointing out the tax burden far exceeds that in neighboring states.

The report looks at how the current tax regime for the telecoms sector has impacted uptake and usage of mobile telephones. Discussing its findings, Sebastian Cabello, Head of Latin America, GSMA, said the "reduced affordability due to high levels of mobile-specific taxation is constraining the potential for further growth, particularly amongst low income groups who would benefit most from access to the mobile internet."

Taxes on the mobile sector are disproportionately high, compared with other sectors and international benchmarks. The tax burden in Argentina (44 percent) is high compared with other Latin American countries, such as Colombia (16 percent), El Salvador (14 percent), Guatemala (11 percent), Mexico (19 percent), Peru (12 percent), and Uruguay (17 percent). The industry is taxed at federal, provincial, and municipal level.

Mobile-specific tax payments are equivalent to around 10 percent of total mobile sector revenue. This is one of the highest shares in Latin America, surpassing other countries such as Brazil (7 percent), Mexico (3 percent), and Chile (0.1 percent).

The report proposes that the Argentine Government should implement three tax reforms, starting with the removal of the 17 percent excise duty on electronics and the 4.2 percent excise duty on mobile services, as well as the elimination of the 6.7 percent provincial turnover tax.

It said "each of these reforms would increase adoption of mobile, particularly amongst low-income groups, spur the migration to smartphones and 4G networks, increase usage per subscriber, and result in lower prices for both households and businesses."

Cabello added, "As a comprehensive taxation reform is being assessed in the National Congress, the timing is now for Argentina to consider a more efficient and inclusive way of taxing mobile services. It is essential that we make these reforms to allow Argentina to maximize the economic and social benefits of mobile by encouraging the growth of the digital economy, which will be key for the country's future."

TAGS: tax | business | Chile | Uruguay | training | Colombia | Mexico | excise duty | internet | Brazil | Guatemala | Peru | tax reform | telecoms | Argentina | El Salvador | services | Tax

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