I moved away from Argentina 5 years ago (wow, time flies) and I agree with all the points above.
Many people in the First World assume that Buenos Aires is a cheap place because it is in South America, but many places in South America have actually higher costs of living than Europe/North America, with lower incomes. An apartment in a nice neighborhood with a reasonable size is ~USD1000[1], while local income for a Sr Software Engineer is around ~USD27K[2] (sounds low even for BsAs standards, but not outrageously so) and taxes are outrageously high (over 50%[3] for an individual, 137.4%(!) of the profits for companies[4]).
How on Earth does that work? Companies have to pay all of their profit + more in taxes? Or is it some misleading figure which compares expenses like employment taxes to the profits?
It's a great question. It seems like at least since 2005[1] the amount taxes owed after deductions have been >100% of profits, which might partly explain the prevalence of off-the-books earnings in the country. It seems to be the second highest tax rate of commercial profits in the world, at 106% for 2016[2].
From the breakdown of that rate[3] it seems the three highest contributors to that rate are
- Turnover tax by City of Buenos Aires of 3% (Total tax rate (% of profit) 53.21%)
- Employer paid - Social security contributions of 23% (Total tax rate (% of profit) 25.94%)
- Tax on financial (check) transactions of 0.6% (Total tax rate (% of profit) 17.25%)
Keep in mind that the last one affects every transaction, so you can _easily_ pay more tax than what you earn just by moving money back and forth.
How on Earth does that work? Companies have to pay all of their profit + more in taxes? Or is it some misleading figure which compares expenses like employment taxes to the profits?