Economy

Argentina's government decrees tax collection in PSP transfers between companies

Starting in August, transactions between companies through apps like Mercado Pago and Ualá will pay taxes

Photo: Mercado Pago survey/Screenshot
  • Tax collection won’t be applied to individuals and Micro, Small and Medium Companies;
  • Mercado Pago’s boom was mostly in Argentina’s countryside.

Argentina‘s government published a decree on Saturday that reinstated a transfer tax that former Argentina‘s President Mauricio Macri had eliminated. The emergency tax over PSP (Payment Services Providers) transactions between companies will be in force from August.

READ ALSO: COVID-19 outcome in payments: Debit purchases in Argentina rose by 32%

It means that transactions between companies held through payment apps such as Mercado Libre‘s fintech arm Mercado Pago and Ualá will pay the tax. Yet, tax collection won’t be applied to individuals and micro, small and medium-sized companies. Also, monotributistas (people that pay Argentina‘s unified tax that includes Value-Added Tax and Earnings) won’t have to pay the new tax.

READ ALSO: Argentina’s cashless king targets Latin America’s unbanked millions

According to Argentina‘s government, the new tax explanation is “to have a calm economy, fiscal sustainability must be seen as a project of common interest, as a social investment to promote a robust economic recovery and begin to build a path of sustainable development based on a productive structure that ensures rights and contributes to the social welfare of the inhabitants of Argentina.”

Mercado Pago’s acceptance tripled in Argentina

A new survey by Mercado Pago showed that in 2020 more than 8 million people in Argentina paid online for the first time, and the number of businesses and professional activities that joined the digital service tripled: they went from 200,000 in March 2020 to 590,000 in March 2021. Data comes from buyers and sellers who use Mercado Pago’s online payment methods outside of Mercado Libre‘s marketplace.

READ ALSO: Ualá meets with Argentina’s government and pledges to hire 750 people in the country

“Online payment tools have allowed many entrepreneurs and SMEs to continue being a source of work,” said Jonathan Stern, director of online payments at Mercado Pago, in a press statement.

“These advances demonstrate how e-commerce and digital services help transform the economy, society, and culture through innovation and technology, providing opportunities and tools that are tailored to the needs of users,” he added.

READ ALSO: Argentine fintech Ualá begins its expansion across Latin America with the launch of operations in Mexico

Mercado Pago’s boom was mostly in Argentina‘s countryside. Growth was higher in the country’s interior, mainly in Argentine Northwest: + 88% in Santiago del Estero and + 86% in Jujuy and Salta, + 82% in Catamarca and +76% in Tucumán.

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