Automotive companies celebrate the reduction in withholdings, but complain about Gross Income and municipal taxes

The automotive industry supported the Government’s announcement to move forward with a gradual reduction of export duties starting in June, a measure that the sector considers key to regaining competitiveness in foreign markets. But, at the same time, he demanded that provinces and municipalities accompany with a reduction in local taxes that, according to the terminals, continue to affect export capacity.

At the moment, Firms in the sector pay 4.5% and that rate will reach zero in June 2027, as announced by President Javier Milei on Thursday at the Buenos Aires Grain Exchange.

The Association of Automotive Factories (ADEFA) maintained that the scheme announced by President Javier Milei establishes “a clear and predictable path” until mid-2027.

“Certainty in the rules of the game is a indispensable condition so that automotive terminals and local manufacturers can plan their production, export and investment schemes,” he stated. Rodrigo Pérez Graziano, president of ADEFA.

The manager highlighted that the measure was the result of a dialogue agenda with the Ministry of Economy and the Secretariat of Industry and Commerce. He also thanked the management of Minister Luis Caputo and his team, in addition to the technical work carried out with representatives of the value chain.

ADEFA’s proposal occurs in a context in which the Argentine automotive industry maintains a strong export profile, but faces structural competitiveness problems.

“The reduction of the tax burden on exports represents a direct stimulus to recover competitiveness in regional and global markets in an extremely challenging global context,” said Pérez Graziano.

However, the chamber warned that national tax relief will not be enough if local taxes are not also reduced. In particular, ADEFA claimed the elimination of Gross Income and municipal taxes that it considers distortive.

Depending on the entity, these charges may currently represent an impact of up to 10% on the export value of vehicles produced in Argentina. For automotive companies, this extra cost limits the possibility of accessing certain markets, especially against competitors from countries where exports are not taxed.

The sector is one of the main generators of industrial foreign exchange in the country. According to ADEFA data, the automotive chain is the second industrial complex that exports high value-added goods in Argentina and represents 48% of total exports of manufactured goods of industrial origin.

In addition, it concentrates 70% of Argentine industrial exports destined for Brazil. The automotive industry participates with 8.4% of industrial GDP.

ADEFA also highlighted that the sector generates about US$ 9,000 million annually from exports and that Argentina is the fourth world producer of light pickups, one of the most relevant segments for local terminals. In terms of labor, the activity represents 9.8% of industrial salaried employment.

In this framework, the chamber ratified its commitment to continue working with the national government, provinces, municipalities and the value chain to promote investments, increase production, boost exports and strengthen the domestic market. The objective, said the entity, is to sustain formal employment and improve the long-term competitiveness of the sector.