Due to tax exemptions and promotional regimes, the Budget Law estimates that next year’s tax expenditure will be AR$995.8 billion, equivalent to 2.64% of GDP, a level comparable to that of this year.

Of this total, 73.9% consists of special tax treatments included in the current tax legislation (AR$735.7 billion) and the rest is for various economic promotion regimes (AR$260.1 billion).

  • For 2020, total tax expenditures are expected to reach AR$714.7 billion, equivalent to 2.63% of GDP and with a similar composition.
  • In the projection for next year, lower VAT collection stands out, with a total of AR$444.3 billion (1.18% of GDP); more than half of it is due to reduced rates on meat and vegetables.
  • Fuel Tax is the second largest tax expenditure, with AR$132.7 billion, mainly explained by the difference between the rates applied to gasoline and diesel fuel (AR$83.36 billion).
  • Nearly half of the reduced income tax collection (AR$85.5 billion) is due to the exemption applicable to the income of judges and officials of the national and provincial Judiciary.
  • The two promotional regimes with the highest tax expenditure are those of the province of Tierra del Fuego (AR$77.8 billion) and Knowledge Economy (AR$18.4 billion).

The deferral of tax payments, the accelerated amortization in Income Tax and early refund of tax credits in VAT are not considered tax expenditures; these measures are mainly contained in different promotional regimes.



The Budget Bill for the year 2021 estimates tax revenue at AR$6.46 trillion for 2020, and AR$9.3 trillion for 2021. The expected dynamics imply an increase of 28.6% YoY for 2020 and 43.9% for 2021.

OPC (Argentine Congressional Budget Office) estimates for 2020 a total national public sector tax revenue at AR$6.35 billion – AR$74.23 billion (1.1%) lower than the estimate made by the Ministry of Economy. For 2021, OPC’s estimates are up to AR$8.9 trillion – AR$395.47 billion lower than the 2021 Budget Bill projections.

In real terms, 2021 Budget Bill projects a revenue decline of 9% YoY for 2020, and a 9.7% YoY recovery for next year. OPC estimates that tax revenue will increase 6% YoY in 2021, a less positive dynamic than that projected in the 2021 Budget Bill.

OPC estimates that in 2021 the national government will receive 64.3% of tax resources (AR$5.98 trillion). Of this total, 35% (AR$3.26 trillion) will go to Social Security Agencies, 29.1% (AR$ 2.7 trillion) to the Central Administration, and 0.2% (AR$15.26 billion) to

Decentralized Agencies. Other entities will receive 3.7% of total resources (AR$341.99 billion), and the provinces 32% (AR$2.98 trillion).

The Budget Bill estimates that during 2021 tax expenditures will reach 2.64% of GDP (AR$995.8 billion). Of that total, 73.9% are related to special regimes included in the current tax legislation (AR$735.66 billion) and the remaining is allocated to various economic promotion programs (AR$260.14 billion).

These figures do not show significant changes with respect to 2020, a year in which the total tax expenditure is expected to reach AR$714.73 billion, equivalent to 2.63% of GDP, with a similar composition.

Methodology for calculating Tax Expenditure

Methodology for calculating Tax Expenditure

This paper introduces a conceptual discussion aimed at developing a practical methodology for the evaluation of differential tax treatment policies. A two-stage process is proposed; one technical and one political. The first of these stages is the object of study of this paper.

For the development of this evaluation stage, the existing definitions on the concept of tax expenditure, the economic and practical foundations of the use of differential tax treatments as an economic policy tool to the detriment of other instruments are studied, and different methodologies for calculating tax expenditure of an economic measure are described.

Among the mistakes to avoid, the OPC warns against considering that financing public policy through tax expenditure measures is less expensive than financing it through direct expenditure.

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