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Challenges In Fuel Distribution In Argentina Post-Tax Reform

Written by Corporativo
Published on 08/11/2023 at 16:28
Crise de combustíveis na Argentina
Foto: Luciana Amaral Minami
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Price Control Threatens Stability in Fuel Supply

With the expiration of the “Fair Prices” program in Argentina, the fuel sector is facing a supply crisis. The implementation of a Selective Tax on gasoline and diesel, proposed for discussion in the Senate, has the potential to worsen the situation, increasing pressure on a price control system that is already fragile.

The Impact of Tax Increase

The Legal Fuel Institute (ICL) highlights concerns about the price control system in Argentina, which may be the prelude to an increase in tax evasion and default in the sector. With the addition of new taxes, the already complex tax burden could encourage illegal practices, exacerbating fuel supply problems in the country.

The Complexity of Exchange Control

Argentina faces a paradox: despite producing excess oil relative to domestic demand, the country lacks sufficient refining capacity, which forces it to import fuels. This process requires dollars, a currency that is increasingly scarce due to Argentina’s strict exchange controls.

Consequences for the Energy Sector

Emerson Kapaz, president of the ICL, advocates for maintaining the monofase system in the ICMS for hydrated ethanol to ensure equal conditions in the retail fuel market. He warns that excluding ethanol from this system facilitates tax evasion and the creation of shell companies that evade tax payments, resulting in billion-dollar losses.

The Need for Appropriate Legislation

For the ICL, the approval of Bill 164/2022 is urgent, which would establish a clear definition for chronic debtors and enable more effective actions against market operators who neglect their tax obligations. Kapaz emphasizes that a well-structured tax reform, combined with appropriate legislation, could be an opportunity to reverse the current unfavorable scenario.

With the energy crisis as a backdrop, the ICL points to the need for structural reforms that could bring more stability to the Argentine fuel market. While changes do not occur, the country remains alert for possible new waves of shortages in the coming months.

This article was developed with SEO practices in mind, aiming for excellent performance in search engines, emphasizing keywords such as fuel crisis, price control, tax evasion, default, and tax reform, which are crucial for the context of the energy industry in Argentina.

Source: Luciana Amaral Minami  – conteudonet.

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