New dollars for tourism and luxury goods are in force in Argentina as of today

14-10-22

The official measures, according to the government, will not affect credit card purchases abroad of up to US$300, the payment of applications or streaming services and the so-called "savings dollar".

To avoid a devaluation and to take care of the scarce reserves in the Central Bank of Argentina (BCRA), the government will make dollars for tourism and consumption abroad, some luxury goods and concerts in the country (which require foreign currency transfers) more expensive from today. 

In economic circles, the so-called "Qatar dollar" and the "Coldplay dollar", among others, have been born. The first will be $300, while the second will be $195.

Unlike what happened with the so-called "soy dollar", which required a modification of the official exchange rate that was harshly criticised by the International Monetary Fund (IMF), to make these activities more expensive, the government will once again opt for the addition of perceptions and the extension of the PAIS tax to other goods.

The official measures, according to the government, will not affect credit card purchases abroad of up to US$300, the payment of applications or streaming services and the so-called "savings dollar".

For consumption with credit and debit cards abroad there will be no changes, as mentioned, up to US$300. Until then, the official dollar - Banco Nación quotation - at $150 was added to the PAIS tax (30%), the perception on account of income tax and personal assets (45%). That gave an exchange rate of $262. The government believes that this group of consumers includes those who pay for apps or streaming services, they said.

The change will then be for purchases of more than US$300 with credit and debit cards, and for tickets abroad and package tours abroad. To these will be added 25% on account of Personal Property, which will bring the exchange rate to $300. The increased exchange rate will not be applied only on the excess of that consumption (US$300) but on the total of what is consumed in foreign currency. In other words, once this ceiling is exceeded, the entire exchange rate will be $300. 

According to the government, there are 2.8 million people (93% of consumers using cards in dollars) who spent US$60 million last August. This represents 19% of total consumption. Meanwhile, only 200,000 people (7% of the total) consumed US$263 million, 81% of total dollar spending with cards. The numbers would reveal, according to the government, that the measure to be applied from tomorrow is focused on the high consumption of a wealthy class.

"Taking August 2022 as a parameter, 93% of the people with card consumption in foreign currency will not be affected," official sources indicated.

On the other hand, the government will make purchases abroad of luxury goods more expensive. These will now have a dollar of $300, thanks also to an extra perception of 25% of Personal Property. They were already paying the PAIS tax and a 45% tax on account of income tax and personal assets. These "sumptuary" goods are already listed in the annex of the measure taken by the BCRA that are allowed a 365-day foreign currency transfer.

As an example, the government cited high-end, private jets and small planes, recreational boats, premium alcoholic beverages, watches, precious stones, slot machines and cryptocurrency mining machines.

The hiring of artistic activities abroad (concerts or sports activities, among others) will now pay a dollar of $195, the so-called "Coldplay dollar". This is the official dollar at $150 (quoted by the Banco Nación) to which the PAIS tax is added (30%). This increase in the exchange rate will require the publication of a decree to extend the goods affected by this tax, which is approved in the law of social solidarity and productive reactivation in the framework of the public emergency. This law gives the executive branch the power to expand the range of goods that can be affected by the tax created by Martín Guzmán.