Tax collection seems to be leaving behind the slump of much of 2023, according to a report by the Uruguayan Chamber of Commerce and Services.
Real collection grew by 5.1% year-on-year and anticipates an improvement in activity
VAT collection closed a positive quarter after a year
VAT collection grew by 0.5% in the first quarter of the year
VAT collection increased by 0.5% during the January-March period and grew in real terms for the second consecutive quarter, according to the June economic bulletin of the Uruguayan Chamber of Commerce and Services (Ccsuy).
Tax collection, which is often used as an indicator to evaluate the evolution of the consumption of goods and services in the domestic market, was 74.220 billion pesos in the first quarter, which represents 0.5% more in real terms than the same period of the previous year.
The growth was mainly due to the collection of domestic consumption, which at the beginning of the year increased by 2.11%, contrasting with the fall of 1.48% at the end of last year, something that can be associated with the sharp reduction in the price gap with Argentina that resulted in a lower diversion of consumption towards the neighboring country.
On the other hand, VAT collection on imports had a negative year-on-year performance between January and March, with a decrease of 2.87% compared to the same period of 2023, after the strong increase of 7.21% that was evident at the end of last year.
Despite the improvement in VAT collection, the DGI considered that close to double could be collected in that tax and IRAE, two of the fiscal pillars in the country’s tax structure.
A study by Fernando Peláez, head of the DGI, spoke of low collection efficiency, pointing out that close to 41% less is collected in VAT and 54% in IRAE of the potential, according to a calculation for the period 2019-2021
The report spoke of a “collection gap, divided into the “political gap” associated with preferential treatment, which includes exemptions, simplified regimes, tax benefits and extraordinary deductions, etc., together with the “non-compliance gap”. For Peláez, of the 41% that the DGI failed to collect, 19% was explained by the resignation validated by political decision and 22% was due to non-compliance.
Source: ambito.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
