Argentina scores VW investment while Coca-Cola reportedly weighs pulling back
Just as Volkswagen announced it would invest $650m in boosting its production in Argentina on Friday, Coca-Cola was reportedly considering withdrawing part of a $1bn investment in protest against tax hikes on soft drinks.
The report comes as the government prepares to send a tax reform bill to congress on Monday, which will slash corporate taxes overall but also bump up taxes on soft drinks from 8 per cent to 17 per cent. Anonymous sources at Coca-Cola told various local media outlets that they were also considering halting purchases of lemon juice from Argentina.
Coca-Cola — one of the main buyers of lemons from Argentina, one of the world’s top producers of the citrus fruit — was one of the first companies to make a major investment announcement, for $1bn, shortly after the business-friendly President Mauricio Macri took power two years ago.
Other foreign investors had waited for the outcome of mid-term elections last month, in which the ruling coalition won a solid victory that was cheered by investors.
Volkswagen’s announcement to ramp up its production of SUVs comes as Argentina’s car output climbed 15.9 per cent in October from a year earlier after its sixth consecutive month of growth, in a sign of the overall economic recovery after six years of stagnation.