Argentina | Tax Policy
October 21, 2024
Argentina Announces Dissolution of Federal Tax Authority (AFIP) and Creation of New Agency
Collections and Customs Control Agency (ARCA) will be established with less bureaucratic structure
| Image Credits: "Javier Milei Presidente - Asunción" by Casa Rosada
On October 21, 2024, the Office of the President of Argentina has revealed a sweeping reform aimed at reducing inefficiency within the government. As part of this effort, the Federal Administration of Public Revenues (AFIP) will be dissolved. In its place, the Collections and Customs Control Agency (ARCA) will be established, designed to operate with a more streamlined, efficient, and less bureaucratic structure. This reform is expected to reduce costs and improve public administration.
Structural Reductions and Cost Savings
The creation of ARCA will lead to significant changes in staffing, including a 45% reduction in senior management positions and a 31% cut at lower levels. Overall, 34% of the current administrative structure will be eliminated. These reductions are projected to save the government 6.4 billion pesos annually.
Dismissals of Irregular Hires
In addition to structural changes, 3,155 employees who were allegedly hired irregularly during the Kirchner administration will be dismissed. This move accounts for 15% of AFIP’s current workforce and is seen as a necessary step to eliminate bureaucratic excess that, according to the President´s office, has impeded economic and commercial freedoms for Argentine citizens.
Salary Adjustments for Senior Officials
Another key component of the restructuring involves a drastic reduction in salaries for senior officials at ARCA. The salary of the agency’s head will be reduced from 32 million pesos to 4 million, aligning it with the compensation of a Minister of the Nation. Similar cuts will be made to the salaries of the Directors of the General Directorate of Taxation (DGI) and the General Directorate of Customs (DGA), whose pay will now match that of a Secretary of the Nation, dropping from 17 million pesos.
Leadership of the New ARCA
Florencia Misrahi has been appointed to lead ARCA, overseeing the transformation process. She will be supported by Andrés Gerardo Vázquez, who will serve as the head of the DGI, and José Andrés Velis, the new leader of the DGA. Vázquez brings over three decades of experience in tax administration, while Velis has been instrumental in developing key customs systems, including the Malvina system.
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