Taxes account for 40% of internet prices in Argentina – study

Some 40% of the price of internet services in Argentina is due to taxes, according to the center for studies in public finances at Universidad Nacional de La Plata (CEFIP-UNLP).

The study, presented at the Internet Day event of the Cabase internet chamber, states that the internet segment is subject to more than 20 different taxes and duties of different kinds, which together average between 38.6% and 44.5% of prices depending on the size of the service provision company, the delivery model, the cost structure and the geographic location.

Aside from the high tax burden on the sector, average income per user (ARPU) is also declining, reaching an average of US$12/month for fiber optic services, according to Cabase calculations.

The president of Cabase, Ariel Graizer, told journalists that, in addition, the macroeconomic context is pushing local governments to consider new duties on the sector with the aim of increasing tax revenues.

In general, national taxes and fees are responsible for between 72% and 89% of the levies on the internet segment, while provincial taxes account for 11-14% and municipal taxes 2-16%.

Another problem for the industry is the disparity between taxes in the different provinces and municipalities. The percentage paid in gross income tax is only 2.5% in provinces such as La Rioja but 4.75% in Córdoba.

The national government has committed to reduce taxes, although other more pressing issues such as reducing public spending, curbing inflation and improving the economy must be resolved first.