Overview of the Monotributo System

Monotributo - An Excellent Tax System For Sole Proprietors
This post will cover the monotributo system, a special parallel tax system that frees the sole proprietor from having to comply with the complex federal tax system Argentina imposes on businesses. A business owner starting out as a sole proprietor in the general system needs to pay the following federal taxes: autónomos (a monthly social security tax for independent workers that covers health and retirement), VAT (on a monthly basis), and income tax.

Four Federal Taxes In One
The monotributo system allows self employed people to avoid the complications of paying these taxes each month and, instead, use an alternate system which requires the payment of a fixed monthly tax, which varies depending on three variables: gross annual receipts, the physical space occupied by the business, and annual electricity consumption. In almost all cases, the monotributo system will result in the sole proprietor paying less taxes.

Enrolling in Monotributo
To enroll in monotributo, the taxpayer will need a DNI, a CUIT, and will need to complete AFIP form 183/F. If you don't have a CUIT, you can apply for one at AFIP while you are there to enroll in monotributo. If you do not yet have your DNI, you will need to bring a certificate from the Dirección Nacional de Migraciones which has your file number and states your residency status. If you don't have a visa which gives you work authorization, you won't be able to enroll. So, the first step for expats looking to enroll is to make sure you have your visa in order.

Choosing a Category
The taxpayer will need to enroll in one of the 13 monotributo categories, depending on the type of business activity that he or she is engaging in and based on the three variables discussed above. Categories A-E are for service businesses, while cateogories F-M are for retail and manufacturing type businesses. The table is listed on this AFIP page. All values are listed in pesos.

Recategorizing
If you start a retail shop and, based on the size of your store, you fall into Category I, for example, you will need to recategorize if one of the variables listed in the table above is exceeded. For example, if your monthly sales exceed $4000 pesos, you will need to move up a category.

Recategorizing can be done three times per year between the first and the seventh of the month in January, May, and September. This can be done online through the AFIP web page.

Resigning from Monotributo
Make sure to resign from the monotributo system if you no lnoger operate your business. Stopping the monthly payments is not enough. If you don't resign, you will accumulate debt with AFIP and the interest rates and penalties for non-payment are rediculous. It is the equivilent of owing money to the mob.

If your business becomes successful and you start earning above and beyond what is permitted by the monotributo system, you will need to resign from the system and join the general system (VAT, income taxes, autónomos, etc).

Overview of the Monotributo System