ARCA: 89 Annual Tax Returns for SMEs and Automatic Fines of Up to $10 Million

89 tax returns per year: the new baseline for SMEs

An SME employer must file 89 annual tax returns with the Agency for Revenue and Customs Control (ARCA), according to tax expert Miriam Roldán, cited by the newspaper Tribuna. Until recently, the number was 25. The increase is due to the inclusion of new informational and determinative modalities. In the case of a self-employed plumber, the returns went from 14 to 38 per year.

The increase exposes taxpayers to a higher risk of non-compliance and, therefore, to automatic fines. Roldán, who is part of the group of tax experts meeting with Economy Minister Luis Caputo, noted that «today it has multiplied not only by the number of returns, which between informational and declarative, a registered taxpayer (RI) SME employer must file 89, but now the risk is greater and it is more likely to fall into non-compliance.»

Automatic fines: from $220,000 to $10 million without proportionality

Penalties for non-compliance in informational returns before ARCA range from $220,000 to $440,000 and are applied automatically upon detection of the fault. In the case of determinative tax documentation, fines range from $5 million to $10 million. Roldán warns that they are not proportional: a self-employed person without employees and a large company pay the same for not filing an informational return on time.

The Tax Innocence Law (No. 27,799) updated the fines with an inflationary adjustment logic, but according to the draft project that Roldán gave to Caputo, «it omitted to weigh the taxpayer’s ability to pay.» The text states that «a uniform minimum burdens with identical weight those who bill millions and those who receive subsistence income, becoming confiscatory for the small taxpayer.»

Reform proposal: scales, grace periods, and end of automatic fines

At the last meeting of tax experts with Caputo, Roldán presented a draft bill to modify the fines. The proposal establishes staggered reductions: micro-enterprises and individuals, 80%; small enterprises, 60%; medium-sized tier 1, 40%; medium-sized tier 2, 20%. Additionally, it proposes eliminating automatic fines: ARCA should first notify the taxpayer and grant a «grace period» of 90 days for micro-enterprises and individuals, 60 for small, 45 for medium tier 1, and 30 for medium tier 2. After that period, ARCA could notify the fine, but the taxpayer would have 15 days to remedy the non-compliance and avoid the penalty.

The project also seeks to ensure that fines are proportional to the ability to pay, something the current law does not contemplate.

Official changes to the Tax Innocence Law

The Ministry of Economy, in an official statement, announced modifications to the Tax Innocence Law project. Minister Caputo stated that «the spirit of the law does not change at all» and that the goal remains to formalize savings without penalty. The changes include:

• Covered subjects: income caps (one billion pesos) and asset caps (ten billion pesos) are eliminated to access the simplified regime. It is open to all individuals and undivided estates, except for Large Taxpayers, who will not enjoy the exonerating benefits.
• Presumption of accuracy: a minimum threshold of $5 million is introduced for ARCA to break the presumption. Previously, a 15% difference on the declared amount sufficed. Now, if the nominal difference does not exceed $5 million, the presumption remains.
• Rectification period: the taxpayer may file an amended tax return and pay the difference plus interest within 15 business days from notification of the official determination.
• Refund with interest: if ARCA challenges and the taxpayer wins, the presumption of accuracy is restored and ARCA must refund the contributions paid with interest within 45 business days.

These changes aim to strengthen legal certainty, according to the official statement.

Comparison between sources: similarities and differences

Both sources agree that there is concern about the bureaucratic burden and automatic fines, and that reforms are being discussed. However, the Tribuna source focuses on the proliferation of tax returns and Roldán’s proposal, while the official statement from the Ministry of Economy addresses specific changes to the Tax Innocence Law. There is no direct contradiction, but the Tribuna source mentions that Roldán delivered a draft to Caputo, while the official statement does not refer to that specific proposal, but rather to the changes announced by the minister. The official source does not mention the 89 tax returns or the automatic fines of up to $10 million.

Value module: what the documents say

The sources do not contradict each other, but address different aspects of the same issue. Roldán’s proposal does not appear in the official statement, suggesting it has not yet been formally adopted.

What to follow

It is advisable to follow the legislative process of the Tax Innocence Law project and whether the government incorporates the proposal for proportional scales and grace periods for ARCA fines. It is also relevant to monitor whether ARCA modifies the number of required tax returns or whether a prior notification system before automatic fines is implemented.