IT/BPO Firms in Argentina Demand for Tax Reduction

Industry associations representing Argentina’s IT and business process outsourcing (BPO) sectors have urged the government to implement immediate tax reductions, warning that the country’s heavy tax burden is undermining its global competitiveness.

According to a report by the Argentine Chamber of Distributors and Wholesale Self-Service Stores (Cadam), nearly 49% of every $1,000 spent in a store goes toward taxes.

Javier Serafini, CEO of CAT Technologies and Vice President of Argentina’s Chamber of BPO and Contact Centers, told media outlets that the country has one of the highest tax burdens in the region.

The tax burden on employment alone can reach up to 50%, far exceeding the 30% regional average.

Additionally, Argentina’s Value Added Tax (VAT) is among the highest in Latin America, second only to Uruguay. These structural inefficiencies inflate operational costs and erode workers’ purchasing power, negatively impacting both employees and businesses.

Beyond taxation, Argentina’s IT and BPO firms also face exchange rate volatility, which complicates long-term contracts—a crucial aspect of service agreements in the sector.

The country’s history of abrupt currency fluctuations, alternating between periods of overvalued and undervalued currency, has created a lack of financial predictability, further discouraging investment.

Argentina competes with Paraguay, Peru, Colombia, Costa Rica, and the Dominican Republic in providing IT and BPO services to U.S. clients. However, these markets benefit from lower operational costs, allowing them to offer more competitive pricing.

For instance, Argentine firms charge between $14 and $15 per hour for their services, whereas regional competitors offer rates below $10 per hour.

While nominal wages in Argentina are similar to those in Colombia, the combination of a high exchange rate and heavy taxation widens the cost gap, making Argentine providers less attractive to international clients.