Doing business in 2016

In association with: Contents

Introduction ...... 3

– Country profile...... 4

Legal overview ...... 5

Conducting business in Argentina ...... 10

Tax system ...... 12

Labour ...... 18

Audit ...... 19

Trade ...... 21

Finance ...... 23

Infrastructure ...... 25

This Guide has been prepared jointly by HSBC Bank plc and Grant Thornton for the purposes of providing a high-level general overview of the business environment in Argentina for the information of businesses who may be interested in transacting or investing in Argentina. Any transaction or investment in Argentina, however, should only be undertaken based on professional advice specific to such transaction or investment. 2 Introduction This guide to doing business in Argentina will provide foreign investors with an insight into the key aspects of undertaking business and investing in Argentina. The country’s large, qualified and young workforce and its vast amount of natural resources make it especially attractive for overseas investors.

With a Gross Domestic Product of world producers of sunflower previous approval or licenses and of more than USD543.1 billion, crops, mate, lemons and soya bean receive the same treatment as Argentina is one of the largest oil. Additionally the country has a local investors. economies in . The very large automotive, textile and country is a member of the Latin appliance industry. Investors should bear in mind American Integration Association that from 10 December 2015 a and of the Southern Common Argentina has a large middle new government took office in Market; it enjoys good relations class that has increased from Argentina for a four year period, with most countries in the region 34 per cent to 53 per cent of the which can be renewed once. With and represents Latin America with population in the last ten years. a market-friendly orientation and a and at the G-20. The Argentine economy has promise of significant investment faced some challenges in recent in the country’s infrastructure and Argentina’s economy covers a times; economic activity decelerated industrialisation, extensive measures wide spectrum of commercial and in 2014 but mildly recovered are expected in legislative updates industrial activities. The country in 2015, reflecting a decline in and economic sectors. is characterised by its natural external demand. resources; indeed, it is one of the The information in this publication world’s main producers of food While the country has certain is current at December 2015 at the thanks to its agriculture and cattle exchange control policies in place, time of the change in Argentine’s breeding. Argentina is at the top foreign investors do not need government.

3 Country profile

Capital City Buenos Aires

Area 2 780 400 sq. km

Population 43.43 million

Language Spanish

Currency Pesos (ARS)

International dialling code 1+54

National Holidays 2016 1 January – New Year 8 February – Carnival 9 February – Carnival 24 March – Day of Remembrance for Truth and Justice 25 March – Good Friday 27 March – Easter 2 April – Malvinas Day 1 May – Labour Day 25 May – May Revolution 20 June – National Flag Day Argentina 8 July – Touristic Bridge Holiday 9 July – Independence Day Argentina 15 August – San Martins Day 10 October – Cultural Diversity Respect 28 November – National Sovereignty Day 8 December – Immaculate Conception Day 9 December – Touristic Bridge Holiday 25 December – Christmas

Business and Banking hours 08.00 to 17.00 / 10.00 to 15.00

Stock exchanges MERVAL (Mercado de Valores)

Political structure 24 autonomous provinces with their own political and economic administrations

Doing Business rank 2016 121

Ease of Doing Business

Topics 2016 rank 2015 rank Change in rank Starting a business 157 147 -10 Licenses and Permits 173 176 3 Getting Electricity 85 79 -6 Registering property 116 115 -1

Financing 79 71 -8 Protecting Investors 49 46 -3 Paying Taxes 170 169 -1 Trading Across Borders 143 143 No change Enforcing Contracts 38 38 No change Resolving Insolvency 95 79 -16

Source: World Bank Group (Doing Business)

4 Legal overview Political and legal system Argentina is a federal republic where representatives are directly chosen by the people. The federal government is divided in three branches: the Executive branch, led by the President, the Legislative branch, represented by the National Congress and the Judicial branch, represented by the Courts of Justice and headed by the Supreme Court. The governments of the different provinces share a similar organisation.

The President is elected for four years and can be re-elected for one additional term. Presidency is elected by direct vote through universal suffrage.

Presidential elections that took place in the second part of 2015 resulted in a change of the political party which had governed the country during the last 12 years. For the first time in Argentina’s history, its three main jurisdictions, the national presidency, the Buenos Aires city and the Buenos Aires province will be governed by the same political alliance; this is expected to result in unseen levels of programmatic coordination.

The National Congress is formed by two chambers, the Senate and the Chamber of Deputies. All 257 members of the Chamber of a third of the Senators are re-elected found guilty of serious crimes by a Deputies are elected directly by or renewed. Since 1991, at least one jury formed of national legislators, proportional representation for a third of the electoral positions must magistrates and lawyers. four-year period. The Senate is be occupied by women. formed by representatives of all 23 The provinces each have their provinces and the City of Buenos The Judicial branch is formed by own constitution to organise their the Supreme Court of Justice, the Aires. Each jurisdiction is entitled to powers. The executive branch three Senators, two for the majority National Council of the Magistracy is led by a governor elected by political party and another from the and the lower courts. The Council the inhabitants of the province, minority political party. Senators are of the Magistracy publicly calls for the legislative branch has one or elected for a six-year period by direct candidates and shortlists judges to vote. Both Deputies and Senators be appointed by the President with two branches depending on the can be re-elected indefinitely. Every the approval of the Senate. Judges province and the judicial branch two years, half of the Deputies and can only be removed if they are is independent.

5 Data protection do so or the inaccuracy of such will be immediately exchanged for In Argentina data protection is information Argentinean pesos at the official regulated by the Data Protection • The data owner’s right of exchange rate. Act (DPA) of Argentina which data access, rectification and entered into force in 2000. The suppression With the new Administration, Data Protection Agency is the foreign exchange payments regulatory body. Non-compliance with the Data controls are more flexible. While Protection Act can result in the regulatory framework remains, The Act defines personal data as administrative and criminal penalties. a lot of previous Central Bank ‘information of any kind referring Administrative sanctions can authorisations for payments abroad to certain or ascertainable physical consist of a warning, suspension, have been eliminated. The “interest persons or legal entities’. Processing closure of a database or a fine free” 365 days’ time deposit for personal data requires express ranging between ARS1,000 loans for 30 per cent was also consent from the data subject. The and ARS100,000. The criminal eliminated (the Executive Order disclosure of personal data is only penalties include: 616/2005 is still in place but the 30 possible if it is in the legitimate per cent rate was reduced to zero). interest of the database owner and • Imprisonment for up to two the data subject has consented. years for knowingly inserting All Federal Tax Authority (AFIP) false information into a personal foreign exchange controls and In Argentina, the creation of data base authorisations are no longer in place. personal databases that directly • Imprisonment for up to three or indirectly reveal sensitive Non-compliance with the exchange years for anyone who knowingly personal data is strictly prohibited. regulation set forth by the provides a third party with Nevertheless, the Catholic Church, competent authorities can result in false information contained in a political parties and trade unions can administrative and criminal liabilities. personal database keep a register of their members. Sensitive personal data can only • Imprisonment for up to two Money laundering regulations be processed where there are years for hacking into a personal In Argentina, money laundering and circumstances of general interest data base terrorist financing are regulated by authorised by law or for scientific • Imprisonment for up to two law 25.246, laws 26.683 and 26.268 purposes as long as the data owner years for disclosing confidential on Terrorist Criminal Associations cannot be identified from that information from a database and Financing of Terrorism, (passed information. Finally, data containing by the Congress of the Nation on 13 information about criminal The penalties can be higher if the June 2007, and sanctioned by the offences can only be processed by offence is committed by a public National Executive Branch on 4 July competent public authorities for the officer in the exercise of his duties. of same year), which amended Law purposes established by law. 25246. This extended the Financial Exchange controls Information Unit’s mandate to the When personal data is requested, After the US Dollar – Peso parity analysis of suspicious terrorist the data subject is expected to get a was abandoned in 2002, the financing transactions. Law 26.734 prior notification of: Argentine government adopted added anti-money laundering a set of emergency measures provisions to the Argentine Criminal • The purpose for which the data regarding foreign transactions. Code. Decree 825/2011 Penal shall be processed The country operates a complex Code. Additional guidelines have • The recipients of the information foreign exchange control regime. also been provided in a series of The transfer of funds, both in and Resolutions issued by the Financial • The existence of the relevant out of the country, must be made Information Unit, most recently personal database and the owner according to the Argentinean Central Resolution 460/2015. The money of that database Bank rules. laundering offence is regulated in • Whether the provision of Article 303 of the Argentine Criminal information is compulsory or Proceeds of exports must Code. The offence includes the discretionary be repatriated within the conversion, transfer, administration, • The consequences of providing pre-established terms and foreign sale, concealment and any other the information, the refusal to currency brought into Argentina method of putting on the market

6 the proceeds of crime to make their Bank, the Securities Exchange regardless of value, to the UIF origin appear as lawful. Additionally, Commission and the National within 150 days of the transaction it is an offence to receive money Superintendence of Insurance also taking place; and within 48 hours or any other goods arising from regulate money laundering. in the case of terrorist financing. a criminal offence even if the Requests for further information original offence took place outside The powers of the Financial from the UIF must be responded Argentina (as long as the original Intelligence Unit include: to within 48 hours act was a punishable offence in the • All banks are required to maintain foreign jurisdiction). • Request any type of information a database of all transactions that it considers useful to fulfil exceeding ARS10,000 which Money laundering offences are its anti-money laundering and is periodically submitted to punishable with prison sentences terrorist financing duties the BCRA and must be made of between three and ten years • Receive voluntary reports and available to the UIF on request and a fine of two to ten times the analyse suspicious transactions • All individuals entering or amount of the transaction. The leaving Argentina with currency penalties can be higher when the • Inform the Public Prosecutor’s and/or monetary instruments over money launderer commits the office if it considers there is a USD10,000 are required to declare offence habitually or as part of a suspicious transaction this to the customs authorities group and when the offence is • Ask the Public Prosecutor’s Office committed by a public official when to request a search warrant, • Records of all information related performing his duties. However, precautionary measures or to client transactions including if the value of the assets does the seizure of any documents suspicious or unusual transaction not exceed ARS300,000, the necessary for the investigation reports must be kept for at least 10 years offence is punishable with a prison • Act as a claimant before the court sentence of between six months in money laundering and terrorist Intellectual Property Rights and three years. financing cases Argentina recognises the • Request assistance from other In a money laundering case, the importance of protecting governmental agencies or ask for property object of investigation Intellectual Property Rights (IPR), international cooperation can be confiscated during the which include patents, trademarks, proceedings even without a criminal copyright and industrial designs. Individuals or business entities conviction as long as the unlawful The National Institute of Intellectual that fail to comply with their origin of the goods has been Property (INPI) is the authority obligations in relation to the proven. Additionally, magistrates responsible for the registration of Financial Intelligence Unit can can order a variety of precautionary intellectual property. be punished with fines that can measures from the beginning of amount to one to ten times the the proceedings. Argentina is a member of the value of the goods or the operation World Intellectual Property to which the violation is related (as Argentina’s Financial Intelligence Organisation and the World Trade long as the act does not constitute a Unit (UIF) is the main authority Organisation. Additionally, Argentina charged with the prevention of, more serious crime). is part of various international and investigation into, money treaties concerning intellectual laundering and terrorist financing. Multiple resolutions from the property rights: This special unit is in charge of Central Bank and the Financial the analysis and transmission of Intelligence Unit have increased due • WIPO Treaty on Copyright information for the prevention of diligence requirements. of 1996 money laundering and terrorism • WIPO Treaty on Performance financing. It is also a member of Some obligations banks and and Phonograms of 1996 individuals have to comply with: the Egmont Group and it is housed • The Agreement on Trade within the Ministry of Justice Related Aspects of Intellectual • Financial institutions must take and Human Rights. In November Property Rights 2011, Resolution 388 announced ‘reasonable measures’ to identify • The Paris Act of 1971 the creation of a new FIU housed beneficial owners within the government’s federal tax • Financial institutions in the • The Universal Copyright agency (AFIP). Other authorities broadest sense are required to Convention such as Argentina’s Central report all suspicious transactions, • The Rome Convention

7 COPYRIGHT

In Argentina, Copyright is regulated by Law No 11,723 which protects all scientific, literary, artistic or didactic works. It ‘expressly’ protects computer software, data compilations and other materials irrespective of the means of reproduction.

Protection Copyright protection exists from the origin of the work. While registration is not necessary, it does granted establish a presumption of ownership. While foreign works do not need to be registered to be protected, they need to comply with the formalities set forth in the international treaties to which both the Argentine Republic and the country of origin of the work are parties. If there is no treaty applicable to both parties, the author must prove that he has complied with the formalities in the country of initial publication.

Infringements The author and his successors may petition any court for permanent injunctions, damages and publication of rectifying remarks.

Duration As a general rule, the rights are granted for life. The author’s successors have rights for 70 years from 1 January following the author’s death. Anonymous works published by legal entities are protected for 50 years from their publication date. Cinematographic work is protected for 50 years from the date of the last author’s death. Unless otherwise agreed, the law considers the following individuals as authors: scripter, producer, director and soundtrack composer. Copyright of photographic work lasts 20 years from the date of publication of the work.

PATENTS

Patents protect inventions which can be applied in an industrial environment. For a patent to be granted, the invention must be new, have an inventive step which is not obvious to someone with experience in the subject and capable of being used in some kind of industry. Patents and Utility Models are currently governed by Law No 24,572.

Protection Patents can only be granted upon registration with the federal agency for industrial property (INPI). granted Some of the exclusive rights granted to the patentee consist of excluding third parties from the manufacture, use, offer to sell, sale and importation of the patent.

Infringements Infringing a patent means manufacturing, using, selling or importing patented products or processes without the owner’s permission. In case of infringement, the owner of a patent is granted protection by the federal courts against third parties: using the invention, manufacturing the invention, marketing the invention, importing the invention. Some of the remedies offered by the courts include: a permanent injunction, damages and accounting for profits. Violation of a patent may carry criminal penalties including imprisonment.

Duration 20 years from the filing date and cannot be renewed. Three years after the grant of the patent or four years from the filing, individuals are entitled to request an authorisation to use the invention without the patentee’s authorisation if it has never been used or the use has been interrupted for more than one year. Utility models are protected for a 10-year term.

8 TRADE MARKS

A trade mark must be a sign capable of distinguishing goods and services of one undertaking from those of another undertaking. Those signs can be: words, personal names, designs, letters, numeral slogans, sounds, smells, signs and distinctive colours.

Protection The owner can obtain protection in Argentina by registering the trademark at the federal agency for granted industrial property (INPI). Before registration a trade mark is published so third parties can oppose. Trademarks are subject to examination by the Trademark Office examiners. While unregistered trademarks are not legally protected, certain rights have been recognised by the courts to avoid fraud and bad faith. Prominent trademarks have been granted special protection by law and court decisions. A trade mark is considered to be null and void when it is registered by anyone who, when applying for registration, knew or should have known that the trademark belonged to a third party.

Infringements A trade mark infringement action can be brought in the following grounds: • Counterfeiting or fraudulent imitation of a registered trade mark or trade name • Use of a counterfeit or a fraudulently imitated registered trade mark • Offer for sale or sale of a counterfeit imitated registered trade mark In the case of infringement, the owner of a trade mark can request before the federal courts remedies that include: a permanent injunction, damages, accounting for profits and forced sale or destruction of infringing products. Infringement of marks can carry criminal penalties, including imprisonment.

Duration 10 years (registration can be renewed for further periods of 10 years provided the mark was used during the second half of the term).

DESIGNS

In Argentina designs are protected by Executive Order No 6,673/63. Registered designs include two dimensional industrial designs and three dimensional industrial models. The protection is given to the appearance or shape of an industrial product. To be able to register a design, it must have an ornamental character to it.

Protection Registering a design gives the owner a property right over the design. Holding a design granted right provides the owner the exclusive right to use it and to prevent any third party using it without consent. The filing must be made with the INPI.

Infringements In the case of infringement, the owner of a design right can request before the federal courts remedies that include: a permanent injunction, damages, accounting for profits and forced sale or destruction of infringing products. Infringement of design rights can carry criminal penalties including imprisonment.

Duration Once obtained, design rights are protected for a period of five years from the date of filing of the application. It can then be renewed twice for periods of five years.

9 Conducting business in Argentina Business entities can have a maximum of 50. Their Corporation Foreign companies or individuals liability is limited to their capital Formation wanting to do business in Argentina contributions. There are neither Organisations wishing to set up will need to decide under which nationality nor residence restrictions a Corporation in Argentina need form they want to operate. to become a partner. to hold an inaugural meeting of Businesses can be established shareholders to approve the draft as sole proprietorships, general Capital requirements of the statutes, nominate a board partnerships and cooperatives; While there are no minimal capital of directors and elect a syndic, if applicable. A summary of the however, the most common forms requirements, capital contributions statutes needs to be published in of business are corporations, limited must be deemed appropriate for the Official Gazette. Additionally, the liability companies and branches conducting the company’s business of foreign companies. These deed of the inaugural meeting and activity. The Superintendence of entities are regulated by Business the mentioned publication must be Corporations can decide that the Companies Law 19,550 and the Civil registered at the Public Registry of company needs to have a higher and Commercial Code; corporations Commerce. capital than the one initially decided and listed companies are subject to by the partners. The capital must additional rulings. Shareholders be totally subscribed at the time Corporations may now have A new Civil and Commercial Code of incorporation; 25 per cent must any number of shareholders. was implemented on 1 August be paid at the same time with the Shareholders’ responsibility is 2015. The new Civil and Commercial balance due in the two following limited to their capital contribution. Shareholder/s must attend Code includes 2,671 articles and years. Although contributions in kind the inaugural meeting to set contemplates a significant review are permitted, they must be fully up the corporation and subscribe of the legal framework such as civil paid at the time of incorporation. the capital. and commercial matters, including The capital stock must be divided the regulation of sole partner into quotas of equal value. Capital requirements companies, an entity type previously Corporations must have a minimum not admitted. Sole partner Management capital of ARS100,000. Capital companies must fully integrate their A Limited Liability Company can be contributions must be deemed stock capital at the time of their managed by one or more managers appropriate for conducting the constitution. who do not necessarily need to company’s business activity. The be partners. When there is more Superintendence of Corporations Foreign companies can be than one manager, the company can decide that the company needs shareholders of Argentine by-laws must explicitly explain how to have a higher capital than the one corporations or quota holders of they should exercise their powers; initially decided by the partners. The Argentine limited liability companies that is, individually, alternatively capital must be totally subscribed as long as they are registered with or indistinctly. There are no at the time of incorporation; 25 per the Public Registry of Commerce. nationality restrictions for managers; cent must be paid at the same time nevertheless, the manager or the with the balance due in the two Limited Liability majority of the managers must be following years, except from the Company (LLC) sole partner companies which must residents in Argentina. Formation fully integrate their stock capital at Organisations wishing to set the time of constitution. Although The method to adopt company up a Limited Liability Company contributions in kind are permitted, decisions must be set by the in Argentina need to execute a they must be fully paid at the time partnership contract deed, publish by-laws; nonetheless if one of the of incorporation. The capital stock a summary of the contract in the partners has the majority of votes, must be divided into nominative Official Gazette and register it in the at least two partners need to vote to shares and non-endorsable of Public Registry of Commerce. amend the bylaws. equal value.

Quota holders The appointment of a syndic is Management Limited liability companies need mandatory when the capital of the A board of directors is the body a minimum of two partners and entity exceeds ARS10 million. responsible for the management of

10 the Corporation. Many corporations • A copy of the deeds and rules evidences that the foreign only have one director; however, a that created and govern the company is permitted to conduct three-member board is required for corporation business in the jurisdiction of certain types of corporations such • Minutes of the parent company incorporation as listed companies or those with a meeting where it was decided • A certified document that capital that exceeds ARS10 million. that a branch was to be evidences that the foreign There are no nationality restrictions established, its capital and company meets at least one of for directors; nevertheless, the the appointment of its legal the following conditions: director or the majority of directors representative –– That it has one or more must be residents in Argentina. All • A power of attorney authorising branches outside Argentina directors need to establish a special the applicant to represent the –– That it holds equity holdings domicile in Argentina. corporation or interest in companies incorporated or registered The board of directors must appoint The branch is the same legal entity outside Argentina a President; decisions must be as the parent company; therefore, –– That it owns fixed assets at adopted by the absolute majority of the parent company is liable for its place of incorporation or the board or by special majorities set the obligations of the branch with registration forth in the company’s bylaws. its worldwide assets. As a general rule, branches do not need to have a The value of fixed assets and of Directors must act honestly and minimum amount of capital. equity holdings should be evidenced in good faith in the best interest by means of the company’s financial of the company. They can be held Branches must keep separate statements or a certification signed personally, criminally or civilly liable accounts from the parent and are by the officer of the company. if they fail to comply with their required to file accounts annually legal duties. with the Public Registry of Foreign companies wanting to Commerce. become shareholders of Argentine Branch of a foreign corporations or quota holders of corporation/ Registration of Foreign companies can be Argentine limited liability companies registered as foreign shareholders foreign legal entities need to be registered with the or can be registered as a branch Foreign entities can conduct Public Registry of Commerce. as long as they provide the business in Argentina through Additionally, they need to comply following documents: a branch. The application to with two requirements: register a branch of a foreign • A certified copy of the company’s company must be made by • Perform a significant business articles of incorporation the appointed representative in activity outside Argentina • A certificate of good standing Spanish. It needs to be notarised • Not be banned from carrying and filed locally. It must include the • A certified copy of its bylaws out that business at the place following documents: • A certified document that of registration

11 Tax system Foreign investors are likely to income subject to certain limits be affected by the following and restrictions. Some examples of main taxes: deductible expenses include:

• Corporate Income Tax • Directors’ fees up to 25 per • Value Added Tax cent of accounting profit after tax or ARS12,500 per individual • Personal Income Tax (whichever is higher) • Tax on personal assets • Donations made to certain • Import and Export Duties entities: up to five per cent of the • Other transactional taxes donor’s net taxable profits • Representation expenses if they Corporate Income Tax (CIT) are documented up to 1.5 per Scope cent of the amount of salaries paid Companies resident in Argentina, during the fiscal year including branches of foreign • Taxes levied on goods and companies, are liable to income tax activities that generate taxable on a worldwide basis regardless income of the source of income. A company is resident in Argentina • Royalties for patents and if it is incorporated in Argentina. trademarks paid to non-residents Non-resident companies only (limited to 80 per cent of the pay CIT on their Argentine source amount paid) of income. • Rental payments and automobile expenses (with some restrictions) The corporate income tax rate is • Interest paid on loans used in 35 per cent. the normal course of business is generally deductible subject to In addition, there is an annual Tax thin capitalisation rules on Minimum Presumed Income (TMPI). The tax is imposed on Depreciation resident companies and branches Depreciation is generally computed of foreign companies at a rate of on a straight-line basis over the one per cent (although the tax base estimated or standard useful differs for certain activities). The lives of the assets. The following TMPI is payable to the extent it rates apply: exceeds regular CIT for the year and can offset regular income tax for the • Two per cent for buildings following 10 years. • 10 per cent for machinery and equipment Taxable income Taxable income is defined as the • 20 per cent for tools and vehicles difference between the accounting (with a cap for vehicles) profit and deductible expenditures. Dividends received from another Intangible assets without a definite resident company are exempt from life may not be amortised for income tax. income tax purposes.

Deductions Tax losses Taxpayers are allowed to deduct Net operating tax losses may be from their taxable income expenses carried forward for up to five years. incurred when producing taxable However, losses carry-backs are not

12 permitted. Certain types of losses part of a firm’s taxable income and Thin capitalisation rules such as foreign source losses and will be taxed at the standard CIT Thin rules apply as a restriction on losses on shares or derivatives rate. Gains derived from the sale of the deductibility of interest arising transactions can only be offset shares by an Argentinian entity are from financial debts contracted by against profits of the same kind. subject to income tax. the company subject to income tax with controlling non-resident Administration Gains derived from the sale of listed companies. Except for banks and The tax year is the accounting year shares by an individual resident in other financial institutions and which normally ends on the 31 of Argentina are exempt of tax. Gains companies which withhold the 35 December. Taxpayers subject to derived from the sale of non-listed per cent of the interests, all other CIT are obliged to make 10 advance shares by an individual resident in companies are subject to thin payments; the first one amounts to Argentina are subject to a 15 per rules. This means that when loans 25 per cent of the preceding year tax have been granted by controlling cent tax. and the rest of the payments to 8.33 foreign entities, interest is not per cent. The tax payments shall deductible if the resident company’s There are specific rules for the be made on a monthly basis from debt-to-capital ratio exceeds 2:1. gains derived from the sale of the sixth month after the end of the The excess interest is treated as a shares of an Argentine company accounting year. The payment date dividend payment. by a non-resident; they are subject depends on the company’s taxpayer to a 15 per cent tax. The seller can registration number. Companies Withholding tax calculate the tax on 90 per cent must file their tax returns and pay Withholding tax is charged on any balance due on the fifth month of the gross proceeds or on the dividends, interest and royalties paid after the end of the accounting year. real gain. to non-residents. Companies must pay interest on any late payments. Advanced payments Groups Royalties and technical services fees of TMPI may be required. There are no provisions within corporate tax law addressing the • Royalties for the exploitation of Capital gains concept of group consolidation. The copyright paid to a non-resident Argentina does not operate a filing of consolidated returns is not are subject to a 35 per cent separate ‘capital gains tax’ regime. allowed and there are no provisions withholding tax on 35 per cent Capital gains will therefore form a for relief of group losses. of the gross payment as long as

13 the work is registered with the for interests paid to non-residents is from a company resident in National Copyright Bureau 35 per cent. a non-cooperative country in • Royalties for the exploitation which they have direct or indirect of patents to non-residents Transfer pricing participation. The CFC regime only are subject to a 35 per cent Related party transactions must applies to passive income that withholding tax on 80 per cent be conducted at arm’s length and comprises at least 50 per cent of of the gross payment as long as must comply with the transfer the income of the foreign company the agreement under which the pricing rules and documentation concerned. royalties are paid is registered requirements. In Argentina, transfer with the INPI pricing rules apply if: Personal income tax (PIT) Individuals liable to • Film and television royalties paid • A related company is located Argentine tax to non-residents are subject to a abroad Resident individuals are subject 35 per cent withholding tax on 50 to personal income tax on their per cent of the gross payment. • A non-related company is located in a non-cooperative country worldwide income, non-resident • Fees for technical assistance, (issued by tax authorities) individuals are liable to personal engineering or consulting services income tax only on income arising in • The prices agreed in the paid to a non-resident are subject Argentina. to a 35 per cent withholding on transaction do not reflect normal market prices 60 per cent of the gross payment Any individual is considered a if the agreement is registered with resident for tax purposes if he Indeed, any transaction the INPI and the services cannot satisfies one of the following between related companies or be obtained in Argentina. If these conditions: conditions are not met, the 35 per unrelated companies located in a non-cooperative country (issued cent rate is applied to 90 per cent • Individuals that are native and by tax authorities) is presumed of the final payment naturalised Argentine citizens not to be at arm’s length unless the contrary is proved. If the tax • Foreign individuals that have been Dividends granted residence in Argentina Dividends paid to local individuals or payer is unable to prove that the price paid is one they would have • Foreign individuals that remain foreign individuals and entities are paid in an arm’s length transaction, in the country for 12 months subject to a 10 per cent withholding tax authorities can make transfer or longer under temporary tax, irrespective of the 35 per pricing adjustments to the income authorisation cent withholding tax, if dividends and expenses allocated between exceed the payer company’s the parties. Individuals belonging to the third taxable income. category can be considered as Argentina has adopted the non-resident if they have not been Interest Organisation for Economic granted permanent residence A withholding tax rate of 15.05 per Co-operation and Development and they can prove that they do cent applies to the following type of (OECD) transfer pricing guidelines. not intend to stay in the country interest payments: These include the acceptable permanently. methods of determining the • Interests on loans obtained by a “arm’s length principle”, such as, Additionally, those individuals that national financial institution comparable uncontrolled price, are in Argentina for work-related • Interests on loans granted by cost plus, resale price, comparable reasons and stay in the country foreign financial institutions profits and profit split. Taxpayers for less than five years are also located in jurisdictions not are required to use the method that considered to be non-resident. The considered as tax-havens under best reflects the economic reality of same rule applies to the members the Argentine regulation the transaction. of their family that travel with them. • Interests on loans related to imports of movable depreciable Controlled foreign companies Taxable income assets, except vehicles, granted (CFC) Taxable income generally by suppliers In Argentina, the CFC regime comprises various types of income: requires resident shareholders to self-employment income, salaries If the conditions above are not met, include in their taxable income and wages and income from the withholding tax rate applicable any passive income derived investments.

14 Deductions All the deductions listed above are also applicable to self-employed When computing the tax that needs to be individuals. Self-employed individuals can also deduct any expenses withheld from their employees’ salaries, incurred in producing income. Business losses of self-employed persons Argentine employers are entitled to deduct may be carried forward for five years; however, foreign-source business the following expenses: losses can only offset foreign-source income.

• Social security contributions Tax rates and bands – 2015 • Medical insurance payments within Argentina applies a progressive tax rate that ranges from nine per cent to certain limits 35 per cent. Non-residents living in the country for less than six months • 40 per cent of invoiced medical expenses are subject to final withholding tax at a tax rate of 24.5 per cent and they (up to a maximum of five per cent of the are not required to file tax returns. taxpayer’s annual net income) • Travel expenses incurred by salespeople Residents – employment and business income (they need to follow estimates published by the tax authorities) Annual taxable income • Donations to charities and to the Exceeding Not exceeding Tax on lower Rate on government (up to a maximum of five per ARS ARS amount ARS excess % cent of the taxpayer’s annual net income) 0 10,000 0 9 • Burial expenses up to ARS996,36 per 10,000 20,000 900 14 year 20,000 30,000 2,300 19 • Life insurance premiums up to ARS996,36 per year 30,000 60,000 4,200 23 • Mortgage interest for the main residence 60,000 90,000 11,100 27 up to ARS20,000 per year 90,000 120,000 19,200 31 • Employer contributions related to 120,000 – 28,500 35 domestic help personnel up to the non-taxable threshold amount per year Tax returns • Taxes on bank debits and credit The tax year is the calendar year, returns must be filed between 15 and • Contributions made to mutual guarantee 21 April (in particular cases May) of the following year. No extensions are companies granted to file the returns. Individuals who only have employment income that does not exceed ARS144,000 annually do not need to file an income There are special family deductions and tax return given that tax is held at source by their employer. allowances; for which individuals can deduct varying amounts: Self-employed individuals must register with the tax authorities and file their returns annually in April for the previous calendar year. • For a spouse

• For each child residing in Argentina for Individuals with income other than wages (including self-employment longer than six months during the tax income) have to make payments every two months from June to year. To qualify, the dependant must not February based on the amounts paid on the previous tax year. Any earn more than the non- taxable threshold amounts withheld are treated as advanced payments. amount

• For any other dependant residing in Married couples are taxed separately on income derived from personal Argentina for longer than six months activities, on assets acquired before marriage and assets acquired after during the tax year as long as he does not marriage with income earned from personal activities. earn more than the non-taxable threshold amount Resident tax-payers are entitled to tax credits for income tax paid • An additional annual non-taxable abroad; Argentina has double tax treaties (applicable for legal entities deduction is granted to those individuals and individuals) with the following countries: Australia, , , that live in Argentina for more than Brazil, Canada, Denmark, , , , , , six months during the calendar year Norway, Russian Federation, Sweden and the United Kingdom, (that increases 380 per cent if they are employees). and (since 2016).

15 Tax on Personal Assets There is finally another regime for non-residents, This tax is applicable to: applicable over the value of securities at a rate of 0.5 per cent that applies over the difference between the assets • Individuals domiciled in Argentina (over assets located in and liabilities of the company, as at 31 December of the Argentina and in other countries) corresponding year, related to each stockholder. • Individuals domiciled in other countries (only over assets located in Argentina) The share issuer (a corporation) is responsible for the tax paying and he will have the right to recover the amount Individuals domiciled in Argentina with total asset of more paid to the Fiscal Authorities. than ARS305,000 are required to pay the net wealth tax at the rates listed below: It must be noted that foreign individuals moving to Argentina for less than five years for work reasons are not Total value of taxable assets considered domiciled in the country. Exceeding Not exceeding Rate on Real estate tax ARS ARS excess (%) Sales of real estate by individuals are subject to a transfer 305,000 750,000 0.50 tax of 1.5 per cent on the sale price. 750,000 2,000,000 0.75 Other Taxes 2,000,000 5,000,000 1.00 Value Added Tax (VAT) 5,000,000 – 1.25 The Argentine VAT is due on the sales value of products, most services and on the import of goods and services. Deposits (except in current accounts) in local banks and While the general rate is 21 per cent, certain items public bonds are exempt from this tax. are exempt and others are subject to a reduced rate of 10.5 per cent or an increased rate of 27 per cent. With regards to non-residents, the Law establishes that whoever has possession, use, eligibility, disposition, VAT administration deposit, hold, management or store of any asset or All businesses making taxable supplies in Argentina property, subject to the Tax on Assets and that belongs through a permanent establishment are required to to individuals established abroad, should pay the tax as a register for VAT. Registration is also mandatory for local substitute at the rate of 1.25 per cent. individuals if their annual turnover from the supply of goods exceeds ARS600,000 and the annual turnover The tax is not applicable to the following: from the supply of services exceeds ARS400,000. If • Government securities the amount is lower taxpayers can choose to register a simplified tax regime instead of VAT. • Corporate bonds issued under law 23576 • Equities Tax payers are required to submit VAT returns on a • Mutual Funds monthly basis. Returns and payment in full are due • Cooperatives quotes between the 18th and the 22nd day of the month following the end of the return period. Return liabilities In addition, this applies for certain assets and certain legal must be paid in ARS. VAT payments can be offset by a entities that are located in countries without a system of credit balance arising from another tax collected by the nominative shares, where the applicable rate elevates to Federal Administration for Public Revenues. Penalties 2.50 per cent. apply for errors and omissions in VAT accounting.

16 Applicable rates • 0.6 per cent of deposits and withdrawals in banks checking accounts opened in local financial entities Rate (%) Applicable to • 1.2 per cent of any credits on savings accounts 0 The goods exempt from VAT are: books, • 1.2 per cent of any transactions made in a bank without newspapers, shares, bonds and securities, using a bank account planes for the transportation of passengers, commercial activities and defence and 34 per cent of the credit tax or 17 per cent of the tax security, export of goods and services. amount paid each month can be offset against income tax, depending on the type of account. The services exempt from VAT are: medical services, transportation of persons and Stamp tax freight including international transportation, This tax is levied in each one of the country’s jurisdictions. transport by taxi (if the travel is less than 100 It is levied on juristic acts that involve a flow of wealth km), cash deposits with financial institutions, between the individuals involved in the legal relationship. negotiable bonds publicly offered, services It applies to acts such as contracts and agreements, of directors, controllers and members of deeds, mortgages and other obligations and other the board of listed companies, the letting of financial obligations documented in writing and loans not property when the monthly rent is less than documented as granted by national financial institutions. ARG1,500 or when the property is let for The rates normally vary depending on the jurisdiction and meetings, conferences or similar services. the type of instrument involved. The average rate is one 10.5 Medical services in certain cases, supply per cent of the economic value of the contract. of newspapers, transport services by taxi if the distance travelled is more than 100 Turnover tax km, the supply of certain services related Each one of the Argentine jurisdictions imposes a tax on to dwelling houses, the supply of certain the various stages of production and selling processes. It services related to soil and farming activities, generally applies to gross revenues accrued each month construction of housing, interests and and while the rates and assessment procedures vary commission on loans granted to registered depending on the jurisdiction, the approximate rates are: taxpayers by financial institutions. 27 Telecommunication services (except radio • 3 - 5 per cent for commercial activities broadcasting and services rendered by news • 1.5 - 4 per cent for industrial activities agencies), the supply of gas and electrical • 1 - 3 per cent for primary activities power (except illumination), the supply of current water and sewage services including The export of goods is generally excluded and certain draining and cleaning of wells when the industries, especially small industrial activities are exempt service is provided outside of households for or subject to a reduced tax rate. housing and the user is registered. Import and export duties Excise taxes Argentina is a member of Mercosur which has a Common The excise tax is a federal tax on specific goods and External Tariff that ranges from zero to 35 per cent. services such as: cigarettes, tobacco, alcoholic beverages, In addition to the free trade agreements with a range soft drinks, automobiles, ships and aircraft, mobile phone of countries under Mercosur, Argentina grants certain services, insurance premiums, jewellery, precious stones duty breaks to countries members of the Latin America and some electronic products. The tax is levied on the sale Integration Association (ALADI). Finally Argentina applies price and the rate depends on the category of good. minimum specific import duties on a range on imports from all destinations apart from Mercosur countries. Tax on bank accounts credits and debits This tax is levied on financial transactions. A large variety Exports of all goods are subject to export duties, the rate of financial transactions are taxable, these include: money varies from five per cent to 45 per cent depending on remittance, money orders, each debit and credit, cheque the merchandise. deposit on savings account, etc. The applicable rates are:

17 Labour In Argentina, employment law applies to all workers regardless of their nationality as long as the employment relationship is conducted in the country. There are several sources of employment law, including: the Constitution, the Employment Contract Act, the Workday Act, the Employment Injuries Act, the Mandatory Pensions Act and the Collective Bargaining Act. Leaves and employees must contribute These laws govern all employment Annual leave to the social security system in relations in Argentina regardless Employees that have worked for an accordance with the employee’s of the place of incorporation of the employer for more than six months wage level. employer or the place in which are entitled to two weeks’ annual the contract was concluded. The leave. The holiday entitlement In addition to the social security relevant labour authority is the costs, the employer has some other Ministry of Labour, Employment increases with the length of costs such as life insurance and and Social Security. Depending on continuous employment to a work risk insurance. the circumstances, provincial labour maximum of five weeks per year. authorities may also be competent. Additionally, there are 17 public Healthcare and benefits Employment contract holidays in 2016. As many of these Health care Written employment contracts holidays are catholic, there are Basic health care is covered by are not required for permanent, special provisions for employees the Social Security through the full-time employment relationships. belonging to other religions. contributions made by employees Unless the parties agree otherwise, and employers. the Employment Contract Law Paid leave establishes the presumption that Female employees get 90 days of Thirteenth salary Bonus the employment relationship is paid maternity leave. As a general All employers must pay an annual established for an indefinite term rule, employees take 45 days before bonus called ‘thirteenth salary’. The with an initial three months’ trial giving birth and 45 days afterwards; bonus is paid in two instalments in period. However, certain categories however, they can choose to just June and December. Each payment of contracts need to be in writing. take 30 days before giving birth. must be at least 50 per cent of the The cost is covered by the social highest monthly salary received in Minimum wage security system. the previous six months. The minimum wage is defined by the National Council for While certain CBAs may provide for Employees’ compensation Employment, Productivity and longer periods, male employees are Employees that have an accident, Adjustable Minimum Living entitled to ten continuous days of injury or a work-related illness get Wage. This body is formed by paid paternity leave after the birth. the cost of treatment, rehabilitation representatives from the private and sick pay covered for up to 12 sector, unions and the executive There are other circumstances under months thanks to the compulsory branch of the national government. which an employee receives paid employment risk insurance. leave, these include: marriage, death The Argentine Constitution provides of a child, death of a sibling and a Termination that under no circumstances may high school or university exam. The employment relationship may the total monthly remuneration be terminated by mutual consent, received by an employee working Social security employee’s resignation, employee’s full-time be less than the minimum In Argentina there is a single social dismissal, redundancy or termination living wage. security system, both employers of a fixed-term contract.

18 Audit Accounting standards coordinators, creation of the working In Argentina, accounting standards group, planning of training, planning are developed by the Argentine of IT adjustments, within other Federation of Professional Council requirements. in Economic Sciences (FACPCE). The Technical Standards issued In December 2015, the Central by this body are then approved Bank of Argentina through by Professional Councils of Communication “A” 5844 Economic Sciences in each established the guidelines to be province. Additionally, the Central followed by financial institutions Bank and the National Insurance for the purpose of presenting the Superintendence supplement the reconciliation of assets and liabilities accounting standards with rules applying IFRS. The due date of the specially created for the entities first presentation is on 31 March they supervise. 2016 and thereafter semi-annually in September and March to final The Technical standards are based implementation. This presentation on IFRS ruling; however there are requires an external audit report. multiple differences with current IFRS. On the other hand, FACPCE Also in this context, Internal Shareholders or issued a resolution in 2010 for the Audit shall issue a biannual report full adoption of IFRS for financial informing the progress of the plan. years beginning on or after representatives 1 January 2012 for public companies Accounting records quoted in local capital markets. According to Article 44 of the attending This ruling did not apply to banks, Commerce Code and Law No financial institutions, insurance 19550, all Corporations domiciled the company companies and other industry in Argentina must keep accounting subject to special regulation. records of their transactions. There meetings need are two mandatory sets of books: Private companies can voluntarily A Journal and an Inventory and to sign the adopt full IFRS, IFRS for small and Balance Sheets Book. These books medium-sized enterprises or local should be kept for up to 10 years Attendance professional accounting standards. after the cease of operations of the company. Book, certifying In February 2014 the BCRA issued a rule establishing that financial A special book must be kept to their address, entities which are subject to the record company meetings’ minutes. BCRA supervision shall be bound by Additionally, firms must have a identity card the convergence of the Reporting Register of Shares which should and Accounting Regime to the IFRS. contain information such as the kind number, of shares, rights and obligations, In September, the BCRA issued status of capital integration, the number of a Communication, including the votes granted, etc. Finally, the detailed contents and formalities shareholders or representatives shares held to be met by the Implementation attending the company meetings Plan in order to begin application need to sign the Attendance Book, and the of the international financial certifying their address, identity card reporting standards. number, number of shares held and corresponding the corresponding number of votes. Starting in March 2015, all entities number of should present a half-yearly plan Businesses subject to the control establishing the appointment of of the General Justice Inspection or votes.

19 to the Securities Commission can document includes a summary of Banks, financial institutions and be authorised by these entities to comparative financial statements, insurance companies must file used modern mechanised records certain defined financial ratios quarterly financial statements with to replace or supplement the and general comments on the the Central Bank and the National Journal book. operations for the period. Annual Insurance Superintendence, fillings must include the board of respectively. Filing and submission of directors’ report to the shareholders statutory financial statements and an annex reviewing certain Audit requirements Public companies must file quarterly All companies must have their aspects of corporate governance. and annual financial statements statutory financial statements audit. with the National Securities For accounting periods starting on Private companies must file their Commission and the Buenos Aires or after 1 July 2013, the International annual financial statements with the stock exchange. They must file Standards of Auditing (ISAs) must Corporate Inspection Department consolidated and separate financial be applied when auditing financial statements. These must include any of the relevant jurisdiction. This statements that are required to be supplementary information required filing also includes consolidated issued under the IFRS. All other by IFRS. and separate financial statements. statutory financial statements These must include: a statement of can be audited using either the An additional document called the the financial position, a statement Technical Resolution No.37 issued ‘summary of financial information’ of income, a statement of the by the Federación Argentina de must be included in the quarterly evolution of shareholder’s equity and Consejos Profesionales de Ciencias and annual statements. The statement of cash flow. Ecónomicas (FACPCE) or the ISAs.

20 Trade Foreign Direct Investment ask for authorisation from the Foreign companies wanting to Customs Service. invest in Argentina are permitted to do so without previous Before registration with the registration or governmental Importers’ and Exporters’ Registry, approval, in accordance with the the individual or corporation same terms as investors domiciled wanting to make these type of in Argentina. Foreign investors transactions must be registered can enter Argentina’s market as a taxpayer with the Federal through mergers, acquisitions, Revenue Service. Additionally, joint-ventures or by participating business entities must prove in publicly financed research and their creditworthiness or financial development programmes. standing. Gross sales carried out during the previous year need to Over the past few years the be equal to at least ARS300,000. government has taken various If this creditworthiness cannot actions to improve the foreign be proved, the entity must post a investment attractiveness of the performance bond to the Customs Exporters country. Foreign Direct Investment Service for ARS30,000. is essential to enhance the must bring country’s productive capacity and Exports are generally subject to GDP. The Argentine government export duties which vary from five foreign currency has settled outstanding per cent to 45 per cent of the value international arbitral awards, of the goods. However, it must proceeds engaged with the International be noted that oil and certain petrol Monetary Fund to improve derivatives can be subject to higher from exports economic reporting data and duties. As a general rule, exporting addressed legacy debt issues. goods is exempt from VAT and into Argentina gross receipts tax. Exporters must Local legislation provides foreign bring foreign currency proceeds under the investment with protection and an from exports into Argentina under arbitration process for disputes with the mandatory terms prescribed by mandatory Argentina. Moreover, the country the Central Bank. They are subject has signed Bilateral Investment to Exchange Control Regulations terms Treaties (BITs) and is a member and to the Criminal Exchange of the Multilateral Investment Control Regime. There are certain Guarantee Agency (MIGA), the tax incentives to promote exports: prescribed by Overseas Private Investment Corporation and the International • Exporters are entitled to additional the Central Centre for the Settlement of reimbursements for exports made Investment Disputes (ICSID). through ports located down the Bank. south Colorado River Imports and exports • VAT refunds of up to 21 per cent Individuals or companies wanting of the FOB value of the exports to import or export goods from or into the country must be registered • Reimbursement regime: inland in the Importers and Exporters’ taxes and other taxes paid Registry before the Customs when imported goods are Service. Those importers or sold for export are totally or exporters that only wish to make partially refunded sporadic transactions do not need • Refunds regime: inland taxes paid to comply with the registration for the goods sold for exportation requirements, they can simply (or services related to those

21 goods) are totally or partially the ordinary customs controls normally include exemption from reimbursed). and where duties or taxes certain provincial taxes, reduced are not levied on imported or public utility rates, support for Goods imported on a permanent exported goods. The purpose infrastructure and equipment basis must comply with all of these areas is to promote projects and facilities for the tariff and non-tariff regulations trade and export-orientated purchase, rental or lease without and prohibitions. Import duties industries by reducing both costs charge of public property vary from 0 to 35 per cent and administrative procedures. depending on tariff classification There are 11 Free-Trade Zones in Trade agreements of the goods. The customs value Argentina located in the following Argentina is a member of the for the calculation of import provinces: Buenos Aires, Cordoba, Southern Common Market duties is the transaction value. Chubut, La Pampa, Mendoza, (Mercosur), a customs union In addition to import duties Misiones, Salta, San Luis, Tucuman formed with Brazil, , there are certain other taxes that and Entre Rios. Under the current and . Associate importers must pay: law the government is only member countries and Bolivia authorised to create one Free grant Mercosur member countries • VAT (for more information see Trade Zone per province except for preferential access to their markets. tax section) sparsely populated areas. The main provisions of the treaty • Statistic fee: levied on the establishing Mercosur were: transaction value of the imported The Special Customs Area covers the Tierra del Fuego province and goods at a rate of 0.5 per cent. • Free circulation of goods and the benefits only apply to firms This fee is subject to maximum services between member states already established there. amounts depending on the value • The coordination of of the imported goods Government incentives macroeconomic policies • A three per cent on income tax Argentina has a series of incentives • The establishment of a common advance payment (the rate is to promote investment by both external tariff 11 per cent when the importer is foreign and local investors: not the final user) • The development of accords for specific sectors • General incentives: instruments Goods imported on a temporary and measures to encourage basis (either to be exported in To be considered as a Mercosur investment applicable to all the same condition they entered good, the products need to meet regions and all areas of economic the country or to undergo a the Mercosur rules of origin, activity. General incentives include process of transformation to be the exporter must provide the measures such as the export re-exported) are not subject to importer with the Mercosur promotion measures mentioned import duties except for certain certificate of origin. above, regulations to reduce initial service fees. Importers must investment costs and measures provide the Customs Service Additionally, Argentina is a to boost competitiveness by with a guarantee to ensure they member of the Latin American reducing operating costs will pay any applicable duties or Integration Association (LAIA) potential penalties. • Sectorial incentives: these which includes Mexico and all incentives target specific sectors Latin American countries in South Tax-exempt areas of the economy including America. The long-term objective Argentina has a number of mining, forestry, tourism and the of this organisation is to establish Free Trade Zones and Special automotive industry a common market in a gradual and Customs Areas. • Regional incentives: they include progressive manner. Indeed, duty provincial investment promotion concessions have been extended Free Trade Zones are areas regimes and investment support to many products shipped to other where goods are not subject to infrastructure. Regional incentives LAIA countries.

22 Finance Capital markets The main equity exchange in Argentina is the Buenos Aires Stock Exchange (BCBA) which works with an associate market, the Buenos Aires Securities Market (MERVAL).

In Argentina, each regulated market or exchange (except the BCBA) has its own regulations and requirements, including:

• Reporting systems • Administrative procedures • Registry and customer information • Transaction records • The nature of the assets that can be traded • The scope of the transactions • The requirements to be fulfilled by each of the agents involved in market transactions

The regulatory body responsible for regulating the equity exchange is the National Securities Commission which supervises:

• Companies authorised to issue and offer securities in Argentina • The trading of securities in the Secondary Market • Individuals and legal entities involved in the public offering of securities and secondary market transactions involving securities

In addition to the regulations issued by each regulated market or exchange, the public offering of securities is regulated by Law 26,831.

Those companies wanting to be listed in any exchange need previous authorisation from the National Securities Commission and for the market itself. Generally, they need to supply regulatory authorities with certain information such as:

23 • A risk rating report reserves and controls financial Insurance industry • A prospectus institutions. There are certain Argentina is Latin America’s fourth restrictions that banking institutions largest market for non-life business • Corporate approval and need to comply with: after Brazil, Mexico and Venezuela. modification of the by-laws in accordance to the public offer • They cannot run companies The Argentine Superintendence regulations engaged in commercial, industrial of Insurance (SSN) is the main regulatory body responsible for Listed companies are subject to or farming activities or any other on-going reporting requirements activities without the Central supervising the insurance industry; Bank authorisation its jurisdiction is limited to the Banking system • They need authorisation from companies doing business in Argentina has a dynamic banking the Central Bank to encumber Argentina. Insurance companies system; more than 64 banking their assets operating in Argentina can be subject to the jurisdiction of other institutions operate in the country, • They are not allowed to accept government authorities such as of which 30 per cent are owned their own shares as collateral the Public Registry of Commerce by foreign banks, mainly from the security for any sort of transaction United Kingdom, Spain and the and the National Institute of • They cannot enter into any type United States. The banking sector Social Economy. of transaction with their directors, has over 4,300 branches and officers, managers or any other more than 16,000 automatic teller The main legislations governing the person related to the institution machines (ATMs). Argentine insurance market are: under conditions more favourable While access to financial services in than those offered to independent • Insurance Law 17,418 which Argentina is higher than the regional third parties regulates insurance contracts average; the government has • Insurance Undertaking law Until the enactment of order 146/94, adopted some measures to further 20,091 which regulates insurance the Central Bank only considers facilitate the access to banking undertakings services across the country. Some applications of financial foreign • Law 22,400 which governs of the key measures were intended financial institutions from countries insurance broking activity to increase the geographical that granted the same treatment coverage and infrastructure of the to Argentine financial institutions. • Resolution SSN 38,708 ATM and the use of e-commerce However, this reciprocity principle (Reglamentation of the Law payment systems through universal is no longer in place. Additionally, 20,091) free accounts. Additionally, the financial institutions in which Central Bank has implemented more than 30 per cent of their Argentine law prohibits insuring various measures to expand the corporate capital is held by abroad interests falling within National Payment System and individuals or entities domiciled Argentina’s jurisdiction. Institutions guarantee more security and abroad enjoy the same treatment offering insurance coverage or efficiency in banking transactions. as domestic financial institutions. offering insurance contracts without Nevertheless, the Central Bank being authorised could be subject to The Central Bank conducts the still has discretionary powers to fines or other penalties. government’s monetary policy, reject applications to establish new regulates foreign currency financial institutions.

24 Infrastructure Argentina has an advanced Argentina has 43 ports, seven Similarly, Internet penetration is communications network which of which are sea ports. Buenos increasing rapidly above the region’s has placed the country as the third Aires is the country’s main port average. Argentina has 64 internet Latin American country in the World and the main point of access and users per 100 people and Buenos Bank’s Logistics Performance Index. departure for most of the country’s Aires is considered as the Wi-Fi The infrastructure network includes: foreign trade. Other big ports capital of Latin America with the include: La Plata, Bahia Blanca, highest concentration of wireless over 39,322 kilometres of national Neuquen, San Antonio Oeste and hotspots per inhabitant. highways and 195,837 kilometres Puerto Madryn. of provincial roads as well as one Finally, thanks to the abundance of the largest railway networks in The country also has an extended of natural resources, the country the world. It has 53 airports, 21 of telecommunications system with is able to meet most of its energy which are international with more the highest density of fixed and requirements with its own than 30 air carriers offering direct mobile lines in Latin America resources. The government is flights from Argentina to more than but with limited infrastructure seeking to promote the use of 40 destinations. investment in the last few years. renewable energies.

25 This document is issued by HSBC Bank plc. (the Bank). This guide is a joint project with Grant Thornton. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. It is not intended for distribution to anyone located in or resident in jurisdictions which restrict the distribution of this document. It shall not be copied, reproduced, transmitted or further distributed by any recipient. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining specific professional advice. Whilst every care has been taken in preparing this document, the Bank and Grant Thornton makes no guarantee, representation or warranty (express or implied) as to its accuracy or completeness, and under no circumstances will the Bank or Grant Thornton be liable for any loss caused by reliance on any opinion or statement made in this document. Except as specifically indicated, the expressions of opinion are those of the Bank and are subject to change without notice. The materials contained in this document were assembled in January 2016 and were based on the law enforceable and information available at that time.

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