73 during the period 2005–2009, suggesting instead a level of self-exclusion by SMEs. Many SMEs do not apply for loans because they expect to be rejected or cannot find affordable rates and terms and thus seek alternative sources of funding (Pasquini & De Giovanni, 2010). Collectively, these findings indicate that Argentina is trailing behind their Latin American counterparts in ensuring that SMEs have reasonable access to financial institutions. Limiting SME access means that institutions are not investing in potential growth projects, which eventually would help boost the economy. Complicated Tax Structure and High Taxes A country’s taxation structure considerably influences the motivations to start or continue business operations. In recent years, the Argentine government has been pressured by its creditors to generate more revenue to pay back its debt and interest, which has led to high taxing brackets for all corporations, regardless of scale. AWorld Bank study explored the business regulations and ease of doing business in 190 different countries. Argentina ranked in the lower quartile, 141 out of the 190 economies, in the ease of starting a business, in contrast to neighboring Chile, which ranked 57. With respect to paying taxes, Argentina ranked 170. A major contributing factor included the total tax contribution rate as a percentage of profit. Argentina was at a staggering rate of 106.3% of profit compared to Chile and Brazil, which had contribution rates of 34% and 65.1%, respectively (World Bank, 2020). The implications of a complicated taxation structure with high taxes disproportionately affect SMEs that are incorporated within the formal economy. Argentina has three tax jurisdictions (national, provincial, and municipal), each imposing its own levels of taxes. Most of the tax burden comes from national taxes, which include corporate and personal income taxes, double taxation treaties on cross-border business, the value-added tax (VAT), and other mandatory payroll taxes. Revenue taxes and stamp taxes are imposed at the provincial and municipal levels (Dentons, 2020). These taxes disproportionately affect SMEs more than large corporations as they are subject to high business income taxes of 25%, a reduction from the 30% corporate income tax after the 2018 tax reform bill. This 25% corporate income tax rate is much higher than that of their neighbor Brazil, which has a corporate tax rate of 15% (PwC, 2021). Yet, with the new reform bill, the wealth tax increased from 0.5% to 1.25%, and taxes on assets abroad went from 0.7% to 2.25%. The PAIS tax (tax for a “solidary and inclusive Argentina”) imposes a temporary 30% tax on the purchase of foreign currency by both individuals and corporations (Rodriquez & Magadan, 2020). This last tax makes it harder for SMEs that conduct business using US dollars, because many suppliers do not accept the local Argentine peso. Not only has this led to tax evasion rates as high as 60% for income and 40% for VAT taxes but also these tax rates have hindered the growth and development of SMEs and led to a massive informal economy in Argentina (Chafkin, 2011). Government Instability Sustained political volatility has been an issue for the country for decades, adding to the economic instability. A study by the World Bank explores countries that have posted the most negative growth years based on GDP starting in 1961. Argentina takes the top spot by having spent the most time in recession, at 22 years, from 1961 to 2018 (Buchholz, 2019). Since Juan Perón was ousted from office in 1955, there since have been approximately three dozen changes in Argentine political power, with the shortest term of a military junta a mere one day (Maidenberg, 1966). However, Perón left a long legacy with the creation of the Justicialist Party that supports Perónism ideologies. Within the last decade, there have been two switches of party power, where Justicialist Party’s Cristina Fernández de Kirchner (CFK) presided from 2007 to 2015 before being succeeded byMauricio Macri, a member of the center-right Republican Proposal party. Macri held office for four years before being succeeded by current President Alberto Fernández (no relation to CFK) in 2019, who has been affiliated with the Justicialist Party. During these three presidencies, there have been significant negative changes in key economic indicators, making it increasingly
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