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Argentina cuts its meal tax to revive a shrinking restaurant sector

Argentina cuts its meal tax to revive a shrinking restaurant sector

Rule Changes

The government trims value-added tax on restaurant bills after menu prices roughly doubled in a year and thousands of hospitality jobs vanished.

March 20th, 2026: Hotels and restaurants top sector growth for 2025

Overview

Updated Jul 9

In December 2024, Argentina cut value-added tax on restaurant meals after a year in which prices roughly doubled and the sector shed more than 10,000 jobs. Hotels and restaurants then grew 7.4 percent in 2025—the fastest of any major sector—per national statistics agency INDEC.

The rebound was uneven. Full-service restaurant transaction volumes kept falling even as bill totals rose, and the sector slipped 0.7 percent in the fourth quarter. In July 2025, Tourism Secretary Daniel Scioli said the government is studying a 10 percent VAT for hotels and gastronomy, following Spain and Italy.

Why it matters

Whether 10,000 lost restaurant jobs come back depends on how far a fiscal-surplus government will cut taxes to bring diners home.

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Key Indicators

21%
Standard VAT on meals
The full value-added tax rate applied to restaurant bills before the December 2024 cut.
~100%
Restaurant price rise in a year
Menu prices climbed roughly twice as fast as grocery prices through 2024.
10,000+
Hospitality jobs lost
Restaurant and hotel jobs cut since Milei took office in December 2023.
7.4%
Hotel and restaurant growth in 2025
Sector grew 7.4 percent for the full year 2025, the fastest of any major sector per INDEC.
-10.1%
Drop in foreigners' spending, May 2025
Foreign tourist spending in Argentina fell 10.1 percent year-over-year in May 2025, per official data.

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People Involved

Organizations Involved

Timeline

December 2023 March 2026

8 events Latest: March 20th, 2026 · 6 months ago
Tap a bar to jump to that date
  1. Hotels and restaurants top sector growth for 2025

    Latest Economic

    INDEC reported hotels and restaurants grew 7.4 percent in 2025, the fastest of any major sector, before slipping 0.7 percent in the fourth quarter.

  2. Government studies 10% VAT for hotels and gastronomy

    Policy

    Tourism Secretary Daniel Scioli said the government is studying a 10 percent VAT for hotels and gastronomy, modeled on rates in Spain and Italy, amid falling inbound tourist spending.

  3. Argentina cuts VAT on restaurant meals

    Policy

    The government lowers the value-added tax charged on meals to reduce menu prices and support restaurants.

  4. Restaurant sector sounds the alarm

    Statement

    FEHGRA reports hospitality falling twice as fast as the economy and asks the government for tax relief.

  5. ARCA replaces the old tax agency

    Policy

    The government dissolves AFIP and stands up ARCA as the new revenue and customs authority.

  6. Strong peso makes dining out costly

    Economic

    The peso gains against the dollar. Restaurant prices climb about 100% in a year as diners retreat.

  7. 'Compre sin IVA' refund program ends

    Policy

    The government lets a VAT-refund scheme lapse, removing one form of consumer relief.

  8. Milei takes office, austerity begins

    Policy

    A new government launches spending cuts and subsidy removals to fight inflation.

Scenarios

1

Cheaper menus, restaurant activity recovers

Possible Resolves by End of 2026

Discussed by: FEHGRA; Argentine business press (Infobae, La Nación)

The tax cut passes through to lower menu prices. Diners return, and hospitality activity climbs back toward year-earlier levels. FEHGRA had argued that relief on the 21% surcharge was the fastest way to reopen margins for small operators. If demand responds, the sector stabilizes and closures slow.

2

Fiscal pressure forces the cut to be rolled back

Possible Resolves by Q2 2027

Discussed by: Economy Ministry watchers; UFM Reform Watch fiscal monitor

Milei and Caputo prize the budget surplus above all. If the lost VAT revenue threatens fiscal targets, the government reverses or lets the meal-tax cut expire. Caputo has resisted revenue-draining measures before, so a quiet rollback under budget strain is plausible.

3

Tax cut fails to stop closures

Uncertain Resolves by End of 2026

Discussed by: FEHGRA; Buenos Aires restaurant owners

The cut lowers prices modestly, but weak wages and high operating costs keep diners away. Utility and rent costs, not VAT alone, drive the squeeze. Closures continue across Buenos Aires despite the relief, and the sector keeps shrinking.

4

Government cuts restaurant and hotel VAT to 10%

Possible Resolves by End of 2026

Discussed by: Tourism Secretary Daniel Scioli; FEHGRA; hotel operators from NOA, Cuyo, and Patagonia

The government is studying a 10 percent VAT for hotels and gastronomy, following Spain and Italy. FEHGRA and regional hotel operators back the measure. If Economy Minister Caputo finds fiscal room, the cut would lower costs for domestic and inbound tourism. The risk is that a surplus-first administration shelves the proposal under budget pressure.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

April 1991 - January 2002

Argentina's Convertibility era (1991-2001)

Argentina pegged the peso one-to-one to the U.S. dollar to kill hyperinflation. The strong peso made Buenos Aires costly for tourists and locals alike, straining dining and travel. The peg ended in a 2001-2002 default and devaluation.

Then

Inflation fell sharply, but exports and tourism grew uncompetitive and unemployment rose.

Now

The peg's collapse triggered a banking crisis and one of the largest sovereign defaults in history.

Why this matters now

A strong peso again makes Argentina expensive and squeezes dining out. The current story tests softer tools, like tax cuts, before pressure builds.

July 2011

Ireland's hospitality VAT cut (2011)

During its debt crisis, Ireland cut VAT on restaurants, hotels, and tourism from 13.5% to 9% to protect jobs. The measure was pitched as a targeted stimulus for a labor-heavy sector.

Then

Tourism operators reported lower prices and steadier bookings through the downturn.

Now

Studies credited the cut with supporting tens of thousands of jobs; the rate later rose again as the economy recovered.

Why this matters now

Ireland shows the mechanism Argentina is now trying: a sector-specific VAT cut used to defend hospitality jobs during a slump.

July 2020

Germany's restaurant VAT cut (2020)

To help restaurants survive the pandemic, Germany cut VAT on prepared meals from 19% to 7%. The reduced rate was extended several times as the sector struggled with closures.

Then

Restaurants gained pricing room during lockdowns and reopenings.

Now

The cut ended in January 2024, and industry groups warned the return to the full rate would raise menu prices.

Why this matters now

Germany shows both sides of the tool: a meal-tax cut can cushion a downturn, but restoring the rate later raises prices, the risk in scenario two.

Sources

(11)