The high tax burden in Argentina is creating challenges for talent acquisition compared to other markets in the region, as highlighted by industry leaders. Javier Serafini, CEO of CAT Technologies, a technology company with 3000 employees, pointed out that the Argentine tax system is one of the highest in the region and is negatively impacting the competitiveness of companies engaged in knowledge-based services.
Specifically in Business Process Outsourcing (BPO) services, the salary component represents 70% of the total service cost, and the tax burden on employment can reach up to 50%, while the regional average is around 30%. Additionally, the Value Added Tax (VAT) in Argentina is among the highest in the region, only surpassed by Uruguay, with rates well above the regional average of 12% or 13%.
Serafini noted that this situation puts Argentina at a disadvantage when competing for talent with other markets, such as Paraguay, Peru, Colombia, Costa Rica, and the Dominican Republic, which have lower cost structures and can offer services at more competitive prices. The import of services from more competitive economies poses an additional risk for Argentina, which is already experiencing a loss of competitiveness in a market it once led with a good reputation.
The businessman argues that if conditions improve, the BPO industry in Argentina could regain its potential and generate over 30,000 jobs for offshore services, as happened in the early years of the 21st century. High taxes are distorting the costs of local operations and affecting the purchasing power of wages, which impacts both companies and workers.
