Legal Framework for Investments in Argentina 2009 - ProsperAr

8/4/2019 Legal Framework for Investments in Argentina 2009 - ProsperAr

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Legal Framework for

Investments in Argentina

Anina Naina Inn Dn An

Auu 2009


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ProsperAr oers a one stop shop in Argentinaor both domestic and oreign investors.

The Agencys objective is to provide the technical

assistance required to acilitate and increase the level oinvestment in Argentina. The Agency accordingly providespotential investors with personalized proessional servicesat all stages o the investment process, rom the initialproject evaluation to the post-investment phase.

The assistance provided includes comprehensive, trustworthyand up-to-date inormation to make the investment decision-making process easier. The Agencys experts help to overcome

specic diculties either directly or through contactsin the competent government bodies, while the Agencyactively encourages associations between local and oreignbusinesses to enhance the benets o investing in Argentina.

This document provides the ollowing inormationin relation to the services provided:

1. The legal ramework or oreign investment in Argentina;

equality o treatment with domestic investors.

2. The legal structures that companies may adopt.

3. General eatures o the Argentine taxation system.

4. Legal ramework or the hire o personnel in Argentina.

5. Framework o norms or investment incentives.

Legal Framework


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ArgeNtINAs NAtIoNAl INvestmeNt DevelopmeNt AgeNcy - LegaL Framework For Investments In argentIna

Ll i i i ai: equliy ih il i

L 21.382

Iduci

In the Argentine Republic, oreign investors and investments are amply protected by the law, supportedby a package o national and international measures which place this country in pole position as anattractive destination or oreign investors and investment.

The Argentine Constitution oers oreigners equal treatment as rom its Preamble and recognizes thatnon-nationals enjoy the same rights as nationals in Section 20.

Section. 20: Foreigners enjoy within the territory of the Nation all the civil rights of citizens; theymay exercise their industry, trade and profession; own real property, buy and sell it; navigate therivers and coasts; practice freely their religion; make wills and marry under the laws. They are

not obliged to accept citizenship nor to pay extraordinary compulsory taxes. They may obtainnaturalization papers residing two uninterrupted years in the Nation; but the authorities may shorten

this term in favor of those so requesting it, alleging and proving services rendered to the Republic.

a) L Fi I

The Foreign Investment Law1 denes the legal ramework regulating oreign investment2.This law covers the dierent ways in which oreign investors may invest capital in Argentina or thepurposes o carrying out established activitiesin the industrial, mining, agricultural, trade, andnancial sectors o the economy, whether directly in the area o services or in other areas related tothe production and exchange o goods and serviceswithout prior approval. The Law states that suchinvestors shall enjoy the same rights and be subject to the same obligations as dened or domesticinvestors by the Argentine Constitution and Laws. The legislation regulating oreign investmentestablishes certain denitions or this purpose.

Fi cpil i:All capital contributions issuing rom oreign investors applied to activities o an economic natureundertaken in the country and/or the acquisition o shares in the capital o an existing domesticcompany, on behal o oreign investors.

Fi i:All individuals or legal entities domiciled outside national territory that make an investmento oreign capital and domestic companies o oreign capital, when these invest in domesticcompanies.

Dic cpy i cpil:Any company domiciled within the territory o the Argentine Republic where individuals or legalentities domiciled outside its borders directly or indirectly own over 49% o the capital or directlyor indirectly have the number o votes required to control shareholder or partner meetings.

Dic cpy dic cpil:

All companies domiciled within the territory o the Argentine Republic where individuals or legalentities also domiciled in this country directly or indirectly own no less than 51% o the capital anddirectly or indirectly have the number o votes required to control shareholder or partner meetings.

law # 21.82

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1.

2.


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rih i i

Foreign investors may remit abroad liquid prots arising as a return on their investment as well asrepatriate their investment.

They may avail themselves o any o the legal orms o incorporation oreseen by Argentinelegislation.

They may make use o domestic credits and loans with the same rights and under the same

conditions as domestic companies o domestic capital.

wy i hich i i c b cd

Convertible oreign currency. Capital goods, spare parts and accessories. Capital or utilities in domestic currency belonging to oreign investors as and when this may meet

the legal requirements or transer abroad. Capitalization o oreign loans in oreign convertible currency. Intangible assets, according to specic legislation. Other orms o contributions contemplated in specic or promotional regimes.

The Foreign Investment Law also provides or the treatment o provisional contributions and o therelationship between controlling and controlled companies.

Piil cibui (exception). Provisional oreign capital contributions made or the purposeso implementing lease contracts or goods, works or services or others, cd by hi Land shall be governed by the terms o the individual partnership agreements applicable according tothe legal requirements given. Nonetheless, the owners o these contributions may opt to make theirinvestment within the terms o the Law.

th lihip b clld d clli cpi. Legal agreements celebratedbetween a domestic company o oreign capital and the company directly or indirectly controllingit shall be considered to all eects as celebrated between independent parties as and when theirstipulations and conditions are in line with common practices in the market by independent entities.

B) Iil ii ld i

Argentina plays an active role in international negotiations concerning the environment or regional,bilateral and multilateral investment in order to improve the investment climate at local level.

ril cp: Argentina has underwritten a series o regional economic agreements whichoer oreign investors an outstanding platorm rom which to expand the scope o access to LatinAmerican markets or their products.

One o the most important o these agreements is the Treaty o Asuncin (Tratado de Asuncin) oMarch 26, 1991 which established the MERCOSUR. The Treaty is enshrined in the ramework o theLatin American Integration Association (Asociacin Latinoamericana de Integracin - ALADI) as aPartial Scope Economic Complementation Agreement.

MERCOSUR includes Argentina, Brazil, Paraguay, and Uruguay. Bolivia and Chile are Associate Memberso the MERCOSUR.


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5ArgeNtINAs NAtIoNAl INvestmeNt DevelopmeNt AgeNcy - LegaL Framework For Investments In argentIna

This process o regional economic integrations benets and enhances oreign investments made inArgentina as they thus have an unbeatable access to these markets. Similar agreements have beensigned with Colombia, Ecuador, Venezuela and Peru as well as Mexico.

Outside the ALADI, Argentina as a Member State o the MERCOSUR has signed xed trade preerenceagreements with the Republic o India and with South Arica, subsequently extended to includethe Southern Arican Customs Union. It has also underwritten ramework agreements with Egypt,Morocco, Israel, the Gul Cooperation Council (Saudi Arabia, Bahrain, the UAE, Kuwait, Oman andQatar) and Pakistan.

Bill cp: Argentina has 54 Bilateral Investment Promotion and Protection Agreements withdierent countries which provide oreign investors and investment with ample protection. (SeeAnnex I).

mulill cp: Argentina has been a member o the World Trade Organization (WTO) sinceit was created in 1995 and an observer o the Investment Committee o the OECD since 1996.This country is thus a member o the Multilateral Investment Guarantee Agency (MIGA), whoseobjective is to mitigate the risks o investment and provide advice and inormation on investmentopportunities in emerging economies.

C) excpi h exch cl i cci h if icuci h pup Fi Dic I (FDI)

The inow o oreign currencies or FDI in the Argentine Republic is exempt rom the exchange controlregime.

The Central Bank o the Argentine Republic regulations exempts rom its control those imports ooreign exchange to be used or: (i) contributions required or direct investments in the country, or (ii)the purchase o stock in domestic companies by direct investors.

The ollowing operations are thereore exempt rom controls:

1. The inows o unds rom non-residents or the purpose o the purchase o real estate, under certainconditions.

2. Income arising rom loans taken out with multilateral and bilateral credit organizations as well as

ocial credit agencies.

3. Income arising rom oreign nancial loans within the non-nancial private sector, aimed atinvestment in non-nancial assets or training or micro-enterprises and/or improvements to be madein residences and amily homes, inasmuch as such loans are incurred and repaid over a period o noless than two years, including capital and interest repayments.

4. All inows o oreign currencies either aimed at, or originating in, the primary underwriting o stockcerticates, bonds or debt papers issued by trust unds whose purpose is to develop inrastructureworks in the energy sector and whose underlying assets are wholly or partially made up o thespecic remits provided or by Law N 26.095, as long as these are paid o or covered wholly orpartially over periods o no less than 365 consecutive days, irrespective o the method o payment.


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2. Ll ucu h cpi y dp

Iduci

The main legal orms o business that oreign investors may establish when installing themselves inArgentina with any degree o permanence include setting up an overseas Branch, the acquisition ostock in an existing company or the creation o a new one.

a) o bch

A Branch is eectively the same company which opens an oce in the country. It is not necessaryto create a new legal entity. It should be noted that the Branch answers in terms o assets to thetotal value o the capital owned by companys Head Oce (HO) and not to the value o the branch inArgentina as assigned by HO.

The branches o oreign companies are required to register their presence. They may undertake all theactivities pursued by HO, in the name o HO and through the person designated as its representative.

The branch must be managed by a legal representative with administrative powers which may belimited according to circumstances. However, as said earlier, HO is responsible or all the Branchsliabilities. Its administrative authority should be suciently broad-based to allow or transactions with

nancial institutions and other local suppliers to be carried out eciently.

The branches are subject to on-going control on behal o the stockholder control organization andmust comply with the same requirements as incorporated business companies. Their accounting must bemanaged separately rom HO and they must periodically present their nancial statements to this entity.

rii Bch

For a Branch to operate legally, the ollowing is required:

1. A certicate testiing to the length o time the company has been operational in the country oorigin and that it is not in liquidation or involved in any legal process that implies a restriction on itsgoods and/or activities.

I the legal system o the country where the company is registered does not make ocial provisionor issuing this certicate, it may be replaced by a report signed to this eect by an attorney ornotary originally rom the country where this situation occurs.

2. Foreign documentation including:

a) The partnership agreement or company statutes and any amendments.b) The resolution adopted by the registered body which resolved to create the branch, aliate or

permanent representation in the Argentine Republic.c) The date o the close o the companys nancial year.d) Its registered oce in the City o Buenos Aires, with the exact address (and the representative

must have power o attorney or this purpose).e) The capital assigned to it, i this is the case.

) The designation o the representative, which must be an individual.


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3. Foreign documentation signed by one o companys executives (who must provide proo o saidaculties beore a public notary or ocial) stating that:

a) There are no restrictions or prohibitions in the place where the company was incorporated whichhinder or prevent it carrying out all o its activities, or its main activity / activities.

b) It possesses, outside the Argentine Republic. One or more operational agencies, branches or representations, and/or Non-current xed assets or exploitation rights or third-party assets o this nature, and/or

Stock in other companies not subject to takeover bids, and/or The practice o transacting investment operations in stock markets as oreseen in its statutes.

c) The individualization o the partners at the time the decision to apply or registration was taken.

4. Original proo o the publication o the edict, when applied to a stockholding company o limitedliability or o a orm unrecognized by Argentine law, including:

a) Concerning the branch, aliate or representation, its registered oces, capital assigned irelevant and the date o the close o its nancial year.

b) As regards the representative, his/her personal data, legal address, term o representation irelevant, limits to his/her authority, in each case i more than one representative is designated.

c) As regards a oreign company, the data oreseen in Article 10 o Law 19.550 in relation to itsstatutes and amendments. (See 4. Publication o Edicts).

5. A document signed by the representative designated certied by public notary or personally ratiedprior to registration in which said representative must:

a) Provide personal data.

b) Establish the registered oces i so authorized.

c) Establish a xed place o business within the radius o the City o Buenos Aires.

B) Ci cpy cquiii h i xii

The Law o Commercial Companies (LCC) contemplates a broad variety o corporate orms, amongstwhich the most widely used by oreign investors in Argentina are the incorporated business company(Sociedad Annima SA) and the limited liability company (Sociedad de Responsabilidad Limitada -SRL). In these cases, unlike Branch oces, these kinds o companies are only answerable in principle orthe capital o the company incorporated or in which stock is acquired.

Unlike domestic companies, oreign undertakings which wish to set up a company or acquire stock inan existing one must previously be able to prove that they are legally incorporated in their countries oorigin on the one hand, and register their statutes, amendments and other documentation authorizingthem to operate, as well as the documentation relating to their legal representatives, in the appropriatePublic Registry o Commerce.


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Icpd Bui Cpy (Sociedad Annima - SA):

This ormat establishes that the companys property belongs to the stockholders whose responsibilitiesare limited by the contributions they make. Its incorporation requires a minimum o two stockholders.The stock may or not be quoted on the Stock Exchange. In the case o Incorporated BusinessCompanies, there is no limit on the number o stockholders in the company (limited liability companiesmay be partners in an incorporated business company).

The operation o these companies is regulated by their statutes. Administration is the responsibility o

a Board made up o one or more members, whether they are stockholders or not. The majority o thosesitting on the Board must be resident in the country. However, there are no limits on the residency ornationality o the stockholders, although i these are oreign commercial companies they should beregistered at the Public Registry o Commerce.

The directors answer unanimously as one and without limits or the company, to the stockholdersand third parties or poor job perormance, breaking the law, statutes or regulations, and any otherdamages arising rom raud, the abuse o responsibilities or gross negligence.

Incorporated Business Companies must be registered via public deed. In the City o Buenos Aires theymust be registered with the General Inspection o Justice (Inspeccin General de Justicia - IGJ) andrequire a minimum capital o AR$ 12.000 (twelve thousand Argentine pesos).

In Argentina incorporated business companies are subject to internal and external tax audits.

External tax audits are undertaken by the Public Registry o Commerce corresponding to thejurisdiction. There are also special regulatory organizations or certain activities. For example,companies which quote on the stock exchange are audited by the National Securities Commission(Comisin Nacional de Valores - CNV), nancial entities by the Central Bank o the ArgentineRepublic (Banco Central de la Repblica Argentina - BCRA); insurance companies by the InsuranceSuperintendent (Superintendencia de Seguros - SSN).

Internal tax audits are usually the responsibility o one or more trustees nominated at the stockholdersmeeting. This is optional or those companies not permanently under the supervision o a governmententity. Furthermore, the Law contemplates the control o the supervisory board, a broad-based entity,established by the statutes. It should be pointed out that in practice this alternative orm o supervisionis not requent.

Liid Libiliy Cpy (LLC):

LLCs share a number o eatures with the incorporated business companies except or the ollowingconditions:

The number o partners may not exceed 50 persons; Incorporated Business Companies may not be partners; They may not quote on the Stock Exchange; A change in one o the partners requires the company statutes to be modied; The procedures or setting up the company are simpler; and, The statutes are more exible.

As with the Incorporated Business Companies, the partners responsibilities are limited to the amount

o stock they underwrite or acquire, but in this case, the partners must provide unlimited and mutually-binding guarantees o their contributions. Partners may own more than one share. Although the Law


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places no restrictions on transers, the partnership agreement may do so.

The task o administering and representing the company corresponds to one or more managers orpartners or others. The managers are held responsible at personal or mutually-binding level, accordingto the way management is organized and the rules governing its working as established in thepartnership agreement.

LLCs may be established by means o public or private instruments. They must register with the GeneralInspectorate o Justice (IGJ). There are no minimum capital requirements, however this should be related

to the companys stated aims.

C iu di h ii Cpi i ai

The registration o commercial companies in Argentina is carried out at the Public Registry oCommerce corresponding to their xed business address. In the case o the City o Buenos Aires, theorganization and activities o the Public Registry o Commerce are the responsibility o the IGJ.The process or establishing a company at the IGJ takes approximately 30 (thirty) days and involves theollowing requirements:

1. Application or Reservation o name or denomination (Reserva de nombre o denominacin)This involves lling in orm # 3, which includes three proposals, available at the IGJ and returning theoriginal and one copy to the Sector called Reservation o names (Reserva de nombres).

2. Presentation ormForm # 1. Establishment and amendments:

a. The partnership agreements or statutes with certied copies.b. Legal Opinion on proessional pre-qualications.

3. Payment o Corporate Establishment Tax or Retributive Tax, as requiredI an Incorporated Business Company is to be established, a one-o payment o the corporateestablishment tax must be made at the Banco de la Nacin Argentina.

I a Limited Liability Company is to be established, a one-o payment o the retributive tax must bemade at the Banco de la Nacin Argentina.

4. Publication o EdictArticle 10 section A o the Law o Commercial Companies establishes that limited liability companiesand stockholder companies must publish an advertisement in the ocial journal or legal publications.

The advertisement must cover certain inormation, including:

Name, age, marital status, nationality, proession, address and identity document number o eacho the partners;

Date when the documents establishing the company were drawn up; The name or denomination o the company; Company address; Company aims; Duration;

Stockholders equity Make-up o the administration and audit departments, names o their members and amount o

time in these positions where relevant;


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Details concerning legal representation; Date o close o nancial year.

5. Initial depositAn initial deposit o 25% o the liquid capital contributed must be made at the Banco de la NacinArgentina. This may be done at the time o applying or registration.

6. Foreign companies establishing a Company in ArgentinaForeign companies wishing to set up a company in the Argentine Republic must, in addition to thepoints mentioned above:

Prove that they have been established in accordance with the laws in orce in their countries oorigin beore the judge o their respective Public Registry o Commerce.

Register the companys original partnership agreement, amendments and any otherdocumentation concerning its authorization, as well as that relating to its legal representativesat the Argentine Public Registry o Commerce (i this is a stockholders company it should also beregistered at the Stockholder Company Register).

State whether there are any prohibitions or legal restrictions on the companys activities, mainactivity or activities in its country o origin. This inormation must be given in the partnership

agreement or statutes o the company or subsequent amendments, i relevant.

Prove that as o the date o the application or registration, the company complies with at leastone o the ollowing conditions outside the Argentine Republic:

Existence o one or more branches or permanent representatives, accompanied to this eect bydocumentation certiing the validity o these, issued by the competent administrative or legalbodies rom the location where they are based.

Ownership o stock in other companies which comes under the heading o non-current assetsaccording to the denitions given in accounting standards in general use.

Ownership o xed assets in the place o origin, whose existence and value must be veried bythe denitions given in accounting standards in general use.

The two requirements mentioned immediately above must be supported by the nancialstatements o the company and/or certication documentation signed by one o the companysexecutives, taken rom the accounting entries transcribed into the companys books.

Provisions related to documentation originating abroad:Documentation originating abroad must be presented according to the requirements establishedby the legislation in orce in its country o origin, duly authenticated, stamped or legalized bythe Ministry o Foreign Relations, International Trade and Worship o the Argentine Republic asrequired, and i necessary accompanied by a version translated into Spanish by a sworn translatorwhose signature must be legalized by the relevant proessional association or this purpose.

ny pclDocumentation originating abroad which must be registered may also be presented under a notary

protocol signed beore a registered notary o the Argentine Republic with its corresponding translationinto Spanish.


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3. gl i h ai x y

Iduci:

In Argentina, tax revenue is collected by the Argentine Government, the Provinces and municipalauthorities. The tax system is structured on the basis o dues levied on income, wealth andconsumption.

At a national level, the Federal Administration o Public Income (Administracin Federal de IngresosPblicos - AFIP), the independent entity which answers to the Ministry o Economy and Public Finance,is responsible or the taxation o income, wealth and consumption.

The main taxes levied at national level include: Income Tax, Value Added Tax, Presumed MinimumIncome Tax, Internal Taxation, Personal Estate Tax, and Taxes on Debits and Credits in Bank Accountsand Other Operations.

In the provincial ambit, taxation is collected and administered by the provincial Duties Departments,entities subordinate to the respective Ministries o Economy in the provinces. The main provincial taxesare Income Tax, Stamp Duties and Real Estate Tax.

Finally, at municipal level, revenue arises rom the collection o a number o taxes and duties.

a) nil xi

Ic tx: All income, including capital gains, is subject to this tax. Companies resident in Argentinapay taxes on their global income, although they may submit as payment on account o these taxesthose amounts eectively paid as similar taxes on their activities abroad up to the limits established othe increase in tax obligations arising rom the incorporation o the earnings gained abroad.

Argentines and nationalized oreigners, oreigners with permanent residence in the Argentine Republicor those who have legally resided in the country or twelve months are considered residents, as arethe ollowing; the undivided estate o taxpayers who ulll the condition o Argentine residents on thedate o decease; incorporated business companies and other business orms (one-person companies,civil associations, oundations, etc.) established in the country. Branches established in the ArgentineRepublic o companies established abroad are considered resident entities and thus subject to taxation.

The tax applicable to resident companies and branches set up in this country belonging to non-residentcompanies is 35% o total earnings.

Non-resident companies that do not own branches or any other permanent establishments in theArgentine Republic are only subject to taxes on income earned in Argentina. The tax is withheld bya payment agent in Argentina according to a taxation scale dependent on the kind o income. Thesetaxes arise rom the application o a 35% levy on presumed earnings as established in the Law onIncome Tax.

Double Taxation Treaties: The Argentine Republic has signed Broad Agreements with dierent countriesin order to avoid double taxation. The agreements seek to avoid companies or individuals being taxedtwice with regard to income, capital and/or wealth taxation. (See Annex II).

vlu addd tx (vat): VAT is a tax applied on the price o the sales o goods and services at eachstage o the commercialization process, taking as payment on account the amounts erogated by thepayment o this tax during earlier stages in the process.


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General VAT is 21% while the dierential VAT rate is 10.5%, hal the general rate. The latter is appliedto dierent goods and services: the sale o capital goods, transport (except or international travel, thesale o newspapers, magazines, brochures and periodicals, prepaid health coverage and interests onoreign and domestic bank loans.

Imports are also subject to this tax at the same rates as domestic goods or services. Exports are nottaxable and exporters may thus apply or VAT reunds on their purchases.

The provision o certain services such as electricity, natural gas and water to properties not or

residential use is subject to greater taxes.

Payments must be made monthly, unlike scal credits arising rom purchases and scal debt arisingrom sales operations.

tx Pud miiu Ic: This tax is applicable to all assets (located both in the ArgentineRepublic and abroad) o Argentine companies at an annual rate o 1%. It is also applied to goodslocated in Argentina which are the property o permanently-established oreign individuals or entities.

The amount to be paid as Income Tax is considered as payment on account or this particular tax. I theIncome Tax to be paid is greater than the Tax on Presumed Minimum Income, only the ormer is to bepaid. I, however, the Tax on Presumed Minimum Income is greater than the Income Tax established,the excess may be used or a maximum period o 10 (ten) years to compensate or the potential over-

charge o Income Tax dened concerning the allowance mentioned in the rst instance.

The calculation o tax credits or parallel taxes paid abroad or goods located outside Argentineterritory may be admitted. Similarly, advances received on account o the taxes to be levied in each taxperiod should be recorded.

tx Pl e: This is a wealth tax as it is applied to personal goods owned up to December 31each year, and is applicable to both individuals and undivided estates.

Individuals residing in the country are obliged to pay this tax on an annual basis, consisting o a sumequivalent to 0.5% o their personal estate with a value o between AR$ 305,000 and AR$ 750,000.Amounts over this gure and up to AR$ 2,000,000, are taxed at 0.75%; rom AR$ 2,000,000 to AR$5,000,000, at 1%, and values over these gures are taxed at 1.25%.

It should be noted that subjects established in Argentina are liable or taxes on goods located both inthe Argentine Republic and abroad.

Individuals domiciled abroad are only subject to taxes on goods located in the Argentine Republic. Theregime applied is that o liable proxy subject to a tax o 1.25%.

Nonetheless, as rom the 2002 tax year there is a presumption in orce which does not admit evidenceto the contrary, according to which, individuals domiciled abroad or undivided estates establishedthere may indirectly own stock and/or shares in the capital o Argentine companies whose owners arecompanies or any other kind o legally valid entity, companies, stable establishments, appropriation owealth or exploitations, domiciled or established abroad.

Likewise, as rom then, Argentine companies are obliged to calculate and pay the taxes on the stockand/or shares in the capital o Argentine companies as liable proxy, calculating the rate on the basis o

a 0.50% charge on the value assigned to the stock/shares (net assets o the Argentine company as oDecember 31 o each year, excepting certain circumstances).


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Il tx: These are applied to the consumption o certain products at dierent rates andaccording to dierent payment and declaration regimes. In general, these taxes are applied tomanuacturers or importers at the moment o selling their product.

tx Dbi d Cdi i B Cu accu: This tax is applied to credits and debits incurredin the bank accounts o the company account holder at a rate o 0.6% or debits and 0.6% or credits.All movements or transers o money will be taxed at 1.2% when carried out using payment systemswhich replace the use o banking current accounts. It should be noted that there are certain dierential

rates and exemptions which may be applied to specic operations.

ti h Ip gd: Import duties are levied at between 0 to 35%, except in specic caseswhere minimum thresholds are applied or the goods are rom a category which receives special taxtreatment.

Generally, goods rom ALADI members are subject to preerences on a percentage basis. As ar asMERCOSUR is concerned, import duties or inter-zone trade have virtually been eliminated. At the sametime, a common external tari has been established or goods sourced and originating outside the zone.

Other taxes that importers must pay are: Statistics Duty (0.5% on cost, insurance and reight CIF up toUSD 1,750) and in some cases, Destination Conrmation Tax (2% o CIF). Imports are also subject to VAT(21% or 10.5% in certain cases) and Income Tax (usually 3% in most cases.

B) Picil txi

Ic tx: All Argentine jurisdictions (provinces and the City o Buenos Aires) apply this tax tothe gross income o any company carrying out a commercial, industrial, agricultural, nancial orproessional activity.

The tax is levied on each commercial transaction and no scal credits are awarded or taxes paid duringpreceding stages. The taxes levied dier according to the kind o activity and the Law in orce in each

jurisdiction varies rom 1.5% to 4%. (Primary and industrial activities in general are exempt). The taxesare paid over a calendar year with payments made on a monthly basis or every two months, dependingon the jurisdiction.

sp Dui: These are provincial taxes levied in each province generally applicable to thetransactions, partnership agreements and operations o any value in the orm o public or privateinstruments.

In general, the tax rate charged is 1% although it may vary according to the deeds and legislation inorce in the jurisdiction where the aore-mentioned deeds apply. In the City o Buenos Aires, this tax isonly applied to the transer o ownership or property and lease contracts or the sublet o properties inwhich commercial activities are carried out. The rate applicable to the transer o property is 2.5% andto the lease or sublet o the same is 0.5%.

Ppy tx: Properties in every jurisdiction are liable or annual taxes which are calculated byapplying the rates xed by the Law on the taxation o the scal valuation o land ree o improvements,and o improvements.


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Property Tax is a realty tax applied to the value o the land and buildings without taking into accountthe personal situation o the taxpayer. The amount is set by the application body and is calculatedaccording to the tax laws o each scal period which establish the valuation and rate scales to beapplied on taxable income according to the system oreseen or each kind o property.

C) muicipl tx

ribui ic x: Municipal tax departments charge rates or providing industrial health and

saety and other services on the basis o income or other xed parameters such as numbers o person-nel, driving orce capacity/horse power, etc.


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4. Ll h hi pl i ai

Iduci:

Employment contracts may take dierent orms. However, the standard rule is the non-xed termemployment contract which aims to ensure the continuity and permanence o the working relationship.

F hi:

Employment contracts are non-xed term, unless there is a specic provision to the contrary. The Lawestablishes a trial period o three months which may be extended to six under a collective agreement.During this period the employee may be red without receiving any orm o indemnity.

Domestic legislation oresees the possibility o part-time employment contracts. Working hours maynot exceed 2/3 o a normal working day and the duration o the contract must be xed by a collectivework agreement. A part-time regime does not allow or over-time.

aul Bu sly:

The Law provides that ull-time workers and employees may take home an extra salary as a bonus(aguinaldo) paid in two six-monthly quotas in June and December. Each quota is equal to 50% o thehighest monthly salary paid during the previous six-monthly period.

vci:

The duration o the vacations depends on the length o the working relationship to-date; i thisexceeds six months and is less than ve years service it is 14 days; 21 days i the period served is veto ten years; 28 days i this is 10 to 20 years, and 35 days i the employees period o service is 20 yearsor more.

I the employee has been in service or less than six months, he/she may be given one day o or eachtwenty days worked.

I the contract expires without the employee having taken his/her vacation, he/she must receivenancial compensation proportionate to the period worked, as and when this is at least three months.

rdudcy:

Employment contracts must be terminated with prior notice. Prior notice shall be given by theemployee 15 days prior to the termination o the contract, while the employer must give 15 dayswarning when the employee is in the trial period, one month when the employee has been employedor a period not exceeding ve years and two months when the period exceeds this.

Redundancy indemnity is equivalent to a twelfh part o the highest basic monthly salary paid to theemployee during the last year o during the time worked i this period is less, or each month o work orraction greater than 10 days.

The highest remuneration which is taken as the baseline may not be greater than three times themonthly average contemplated in the collective agreement applicable to the employee in question.


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The minimum indemnity may not be less than two twelfhs o the highest basic monthly remunerationpaid the employee during the last year o service.

When the employer res the employee because the latter has committed a work-related oense (osucient gravity) which hinders the continuity o the relationship, the latter is not entitled to receivethe indemnity provided or by labor legislation.

scil cuiy cibui:

Companies make employer contributions to cover the social security services o their employees. Thesecontributions cover amily allowances, medical services, pension plans and unemployment unds. Therates are 27% o the gross salary paid or employers whose main activity is the provision and lease oservices, and 23% or other employers.

In order to oster new job creation in Small and Medium-Sized Enterprises, those employers whoincrease the number o persons in their ull-time non-xed term employment are eligible ora reduction in the social security contribution rates. This discount applies to one-third o thecontributions made. At the same time, all the companies based outside the metropolitan area whatevertheir size may oset against VAT a percentage o the amounts paid as employer contributions.

wi hu:

Normal working hours are 8 hours a day, or 48 hours a week. The working day may be extended toinclude hours worked over-time which should be paid at an additional 50% o the normal hourly rate.The hourly rate on Saturdays afer 1 pm, Sundays and national holidays is double the normal rate. Nightwork is permitted but may not exceed the daily period o 7 hours between 9 pm and 7 am.

There are twelve national holidays in the year

Month Date Reason or holiday

January 1 New Years Day

March 24 National Day o Memory or Truth and Justice

March/April * Holy Week Good Friday

April 2**Day o the War Veteran and those Fallen in the South Atlantic

Conict (Guerra de Malvinas)May 1 Labor Day

May 25 Anniversary o the First National Government

June 20*** National Flag Day

July 9 National Independence Day

August 17*** Anniversary o the death o General Jos de San Martn

Octuber 12** Columbus Day

December 8 Feast o the Immaculate Conception

December 25 Christmas

* Variable date.** I this holiday alls on a Tuesday or a Wednesday it is passed to the preceding Monday, and i it coincides with a Thursday orFriday, it is passed to the ollowing Monday.*** The holiday is celebrated on the third Monday o the month.


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miiu Lii w:

In Argentina, the Minimum Living Wage is set by the National Board or Employment, Productivity andWages, made up o representatives rom the trade unions, employers associations and the ExecutivePower. The resolutions passed by this body require a majority vote o two-thirds o its members. Currently,the minimum living monthly wage stands at AR$ 1,400 (USD 364).

The main laws and regulations in orce which regulate labor and welare issues in Argentina are the

ollowing:

Employment Contract Law N 20.744; Law o Union Associations N 23.551 and Decree # 467/88; Collective Working Agreements N 14.250 and 25.250; National Employment Law N 24.013; Labor Reorm Regime Laws N 25.013 and 25.877; Occupational Hazard Law N 24.557; Integrated Retirement and Pension Systems Law N 24.241; Family Allowance Regime Law N 24.714; and National Health Insurance and Coverage System N 23.660 and 23.661.


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5. F i ici

Argentine legislation includes norms designed to encourage development in specic areas o theeconomy. This chapter covers some o the incentives in orce at the time which may be taken intoaccount when making decisions.3

1. Ici i i cpil d d iucu

1.1. Promotion o investments in capital assets and inrastructure works1.2. Reduction in the import allowances o capital assets1.3. Reduction in VAT1.4. Incentives or the production o capital goods, IT, telecoms and agriculture machinery1.5. Import o goods to be integrated into large-scale investment projects1.6. Used production lines1.7. Temporary import o capital goods

2. scl ici

2.1. Automotive Promotion Regime2.2. Sofware Industry Promotion Regime2.3. Promotion o the Development and Production o Modern Biotechnology+

2.4. Biouels Promotion Regime2.5. Mining Promotion Regime2.6. Forestry Regime2.7. Program o Incentives or the Exploration and Exploitation o Hydrocarbons2.8. Public inrastructure works

3. Ici -lci: picil i d z

3.1. Provincial regimes3.2. Free zones

4. Ici chlicl dlp d ii

4.1. Argentine Technological Fund (FONTAR)4.2. Trust Fund or the promotion o the Sofware Industry (FONSOFT)4.3. Fund or Scientic and Technological Research (FONCYT)4.4. Federal Board o Science and Technology (COFECYT)4.5. Promotion o Technological Innovation

5. eply ici

5.1. Integrated plan or the Promotion o Employment: More and Better Jobs5.2. Training and Skills Certication Program5.3. Tax credits or SME training5.4. Tax credit regime or technical education courses

F infain h nid InnInni , pA, 2009.(h://www.a..a)

.


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6. Fici p

6.1. Credit lines rom the Banco de la Nacin Argentina (BNA)6.2. Credit lines rom the Banco de Inversin y Comercio Exterior (BICE)6.3. Credit lines rom the Consejo Federal de Inversiones (CFI)6.4. Subsidized rates or loans or Micro-SMEs6.5. National Development Fund or Micro-SMEs (FONAPyME)

7. exp pi

7.1. Export reunds7.2. Draw Back7.3. Temporary imports or industrial improvements7.4. Export o turn-key actory installations7.5. Regime o in-actory Customs7.6. Regime o in-house Customs7.7. Reunds on exports rom ports in Patagonia7.8. Subsecretariat o SMEs and Regional Development7.9. Export.Ar Foundation


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ax I

1. Algeria (2000)2. Armenia (1994)3. Australia (1992)4. Austria (1994)5. Bolivia (1995)6. Bulgaria (1994)7. Canada (1992)8. China (1994)9. Chile (1991)10. Costa Rica (1999)11. Croatia (1995)12. Cuba (1997)13. Denmark (1994)14. Ecuador (1995)15. Egypt (1993)16. El Salvador (1998)17. Finland (1995)18. France (1992)19. Germany (1992)20. Guatemala (2000)21. Hungary (1994)22. Indonesia (1997)23. India (1999)24. Israel (1997)25. Italy (1992)26. Jamaica (1995)27. Lithuania (1998)

28. Luxembourg (1992)29. Malaysia (1995)30. Mexico (1998)31. Morocco (1997)32. Nicaragua (2000)33. Panama (1998)

34. Peru (1996)35. Philippines(1999)36. Portugal (1995)37. Czech Republic (1998)38. Rumania (1995)39. Russia (2000)40. South Arica (2000)41. South Korea (1996)42. Spain (1992)43. Sweden (1992)44. Switzerland (1992)45. Thailand(2000)46. The Netherlands (1994)47. Tunisia (1994)48. Turkey(1994)49. Ucrania (1996)50. The United Kingdom (1992)51. The United States (1992)52. Venezuela (1995)53. Vietnam (1997)


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ax II

Country DATE OF AGREEMENT LAW N

Protocol 09/16/199625.332B.O. 11/14/00

AUSTRALIA 08/27/199925.238B.O. 12/31/99

AUSTRIA 09/13/197922.589B.O. 05/20/82

BELGIUM 06/12/199624.850B.O. 07/22/97

BOLIVIA 10/30/197621.780B.O. 04/25/78

BRAZIL 05/17/198022.675B.O. 11/17/82

CANADA 04/29/199324.398B.O. 12/13/94

CHILE 11/13/197623.228B.O. 10/01/85

Protocol 02/23/200326.232B.O. 02/26/07

DENMARK 12/12/199524.838B.O. 24/07/97

FINLAND 12/13/199424.654B.O. 07/10/96

FRANCE 04/04/197922.357B.O. 12/30/80

Protocol 08/15/200126.276B.O.08/13/07

GERMANY 07/13/197822.025B.O. 07/23/79

ITALY 11/15/197922.747B.O. 02/24/83

Protocol 12/03/199725.396B.O. 01/15/01

NORWAY 10/08/199725.461B.O. 09/13/01

RUSSIA 10/10/2001 26.185B.O. 01/03/07

SPAIN 07/21/199224.258B.O. 11/19/93

SWEDEN 03/05/199724.795B.O. 04/14/97

SWITZERLAND 04/23/1997------

Protocol oAmendments andAdditions.-

11/23/2000---

---

THE NETHERLANDS 12/27/199624.933B.O. 01/15/98

THE UNITED

KINGDOM01/03/1996

24.727

B.O. 12/04/96

* rai iina aiain : 1/12/2002.-


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ax IIIUul ii:

1. Ll i i i ai: equliy ih ili:

Law 21.382 Decree 1853/93: www.inoleg.gov.arhttp://www.inoleg.gov.ar/inolegInternet/anexos/55000-59999/56254/texact.htm

2. Ll ucu h cpi y dp:

Inspeccin General de Justicia (IGJ)Av. Paseo Coln 285 Ciudad Autnoma de Buenos AiresTel. 0800-333-3445www.jus.gov.ar/registros/IGJ/

3. gl i h ai x y:

Administracin Federal de Ingresos Pblicos (AFIP)Hiplito Irigoyen 370 Ciudad Autnoma de Buenos AiresTel. 0810-999-2347www.ap.gov.ar

4. Ll h hi pl i ai :

Ministerio de Trabajo, Empleo y Seguridad SocialAv. Leandro N. Alem 650 Ciudad Autnoma de Buenos AiresTel. (5411) 4310-6000

www.trabajo.gov.ar


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F infain:

[email protected]+54-11-4328-9510

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Legal Framework for Investments in Argentina 2009 - ProsperAr

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