MOORE STEPHENS Doing Business in Latin America PRECISE. PROVEN. PERFORMANCE. Moore Stephens Latin America MISSION To drive clients success through a strong leadership of a cohesive and well resourced international network with a top- down culture of quality. Vision To be a leading, recognised and highly regarded international accounting and consulting network and the first choice in our chosen markets. Summary Page 1 Executive Summary 4 2 Argentine 5 3 Belize 13 4 Bolivia 22 5 Brasil 32 6 Chile 49 7 Colombia 53 8 Costa Rica 59 9 Ecuador 67 10 El Salvador 76 11 Guatemala 86 12 Honduras 93 13 Mexico 101 14 Panamá 109 15 Paraguay 118 16 Peru 124 17 Dominican Republic 131 18 Uruguay 139 19 Venezuela 149 MOORE STEPHENS Executive Summary PRECISE. PROVEN. PERFORMANCE. 1. Moore Stephens Moore Stephens is a global network of accounting, auditing and consulting firms with presence in 106 countries and with almost 27.000 professionals. Since 1907 Moore Stephens provides accountan- cy and tax services to corporate and individual clients. Moore Stephens has been present in Latin America since 1910 and today it has a well organized re- gional structure with approximately 60 offices and 2.700 professionals, including México. More infor- mation can be found on the website: http://msla.moorestephens.com 2. Tax Information Doing Business in Latin America summarizes the corporate and personal tax systems of 18 countries in Latin America. This content is based on tax and legal information current to December 2015 unless otherwise indicated, and it is focused on the following aspects: • Country Profile • Foreign Investment regime: types of companies and their characteristics • Auditing and Accounting • Labor system: workforce employment, recruitment, types of contracts, conditions of employ- ment, remuneration, etc. • Exchange control regulations • Tax system: number and types of taxes, tax payment, incentives • Protection for investors • Transfer pricing • International agreements and conventions This publication is an overview and should not be seen as a complete explanation of the Tax systems in Latin America. It is subject to amendments in accordance with the laws in each country and multi- lateral agreements. Neither Moore Stephens International, nor any member firms of the global network are responsible for actions incurred or omitted based on this publication. Further details may be found in local publi- cations, we advice readers to consult with specialists in the Moore Stephens member firms in each country. Moore Stephens Latin America December, 2015 4 Ar g e n t i n e Argentine Republic 1. Contact firm identification Moore Stephens - Suarez & Menéndez 1.1 Office, address, telephone Maipú 942, Piso 12 C1006ACN Buenos Aires 2. Expert Professionals CPA Mariel Castro International liaison and Tax partner [email protected] CPA Julio Suarez Taxes Partner [email protected] All in all, it is a separate regime which is not considered official as the religion of the Republic. CPA Alejandro Galván Audits Partner According to the new education act, enacted on [email protected] December 15, 2006, education is compulsory for children aged between 5 and 18 years old. There 3. Country Profile are public and private educational entities for all The Argentine Republic is a sovereign state, orga- levels. The State guarantees free education for all nized as a federal and representative republic, of them, except for university postgraduate stud- and it is located in the South East end of Ameri- ies. ca. Its territory is divided into 23 provinces, and one autonomous city, Buenos Aires, the capital The currency unit is the Peso, which is divided into city of the nation, and seat of the federal govern- 100 cents; it is the functional currency in Argenti- ment. With a population of 40 million inhabitants, na. However, the US dollar and other foreign cur- its human development indices, per capita distri- rencies can be used for internal transactions. bution, economic growth level, and quality of life are among the highest in Latin America. Due to its After the deep crisis of 2001, inflation has re- extension, 2,780,400 km², it is the second largest mained in two digits, even though this is not state in South America, fourth in the American acknowledged by governmental authorities. continent, and eighth in the world. There is still a high level of intervention in the formation of some prices via subsidies, and, in Despite the diverse origins of its population, the some cases, through indirect price controls. common language is Spanish, and its culture uni- fies the country. The youngest population has, in 4. Foreign Investment Regime - Types of general, a good command of the English lan- Companies guage, and, as a result of the Mercosur, many are The types of business associations mostly used by learning Portuguese. foreign investors in Argentina are corporations, limited liability companies, and branches of for- . In Argentina, there is great freedom of religion eign companies. Also, the use of joint ventures, guaranteed by section 14 of the National Consti- trusts, and franchises has become ever more fre- tution, even though the State recognizes a pre- quent during the last years. To cover company eminent role of the Catholic Church, which has a matters, both the civil legislation (Civil Code),and separate legal status with regards to the rest of the commercial legislation (Code of Commerce) the churches and confessions: according to must be considered, as well as the different spe- the Argentine Constitution (section 2), the Nation- cific laws. Company types are governed, in their al State must uphold the Catholic Church, and, majority, by the Companies Act 19550, and its according to the Civil Code, it is legally compared amendments. Except for the cases of joint ven- to a non-governmental legal entity of public law. tures or partnerships, all others must be regis- 5 Ar g e n t i n e tered with the public registry of commerce, which incorporation procedures are reviewed by the is local (each province, and the Autonomous City local control authority, the IGJ in the Autonomous of Buenos Aires having their own jurisdiction). City of Buenos Aires, and in the different provinc- es it has different names. The corporation is creat- The main types of companies set forth in the ed by a deed executed before a notary public, and Companies Act are: incorporation procedures take, approximately, 30 days. Corporate name must contain the terms • Corporations “sociedad anónima" (corporation) or its abbrevia- • Limited Liability Companies tion, "S.A.". Shares are nominative, and non- • Branches of Foreign Companies endorsable. The majority shareholder cannot hold • Trusts over 95% of the shares. In some cases, according to the corporate capital amount, shares in the • Non-Profit Associations stock market or in connection to the national state • Foundations will require the appointment of an auditor, or an auditing committee. 4.1 Corporations or Public Companies (SA) Act 19550 does not define Corporations; however, The current minimum corporate capital amounts section 163 describes the characteristics of this to $ 12,000; in any case, it must be in accordance type of company in the following terms: Capital is with the activity foreseen for the corporation. A represented by shares, and shareholders limit name, corporate purpose, duration, domicile, and their liability to the payment of the shares sub- termination date must be established at the mo- scribed. ment of incorporation. The termination date can be any month of the calendar year. Corporations must have a minimum of two shareholders, and shares can be in the hands of 4.2 Limited Liability Company (SRL) private holders, or they can be offered publicly. In general, the creation and administration of a This is the only type of company where shares can limited liability company (SRL) is relatively easy. be offered publicly. The shareholders' liability is However, the efficacy of its functioning depends limited to the capital contributed. The board of on the existing relations of the partners since any directors is liable for the administration of the modification requires the consent of the majority corporation. Directors are chosen at the annual of the partners and, in some cases, of all of them. shareholders' meeting, and they are personally Its formation is similar to that of a corporation liable for their acts. All corporations are and, when capital is under Ar$ 21 million, control subject to control and supervision by governmen- and intervention by government authorities is tal entities. Directors must be simple residents or much lower. Corporations cannot form part of native Argentineans in their majority. Sharehold- limited liability companies. The company name ers can be individuals or companies, both national must compulsorily include the terms "Sociedad de and foreign. responsabilidad limitada" (Limited Liability Com- pany), or its abbreviation, or the acronym "SRL". In the event a shareholder was a foreign compa- The capital is divided into units of interest, and ny, prior to the creation of the local corporation, the partners (must be more than one and up to its by-laws must be registered and its legal exist- 50) limit their liability to the payment of the units ence must be proven with the Board of Legal En- of interest subscribed. It can be created by a pub- tities (IGJ), among other requirements. The for- lic or private deed, and the articles of organization eign corporation must, thereby, appoint a legal must be registered with the Public Registry of representative, and establish a legal domicile in Commerce, upon prior publication in the Official Argentina. In order to be incorporated, these for- Bulletin. eign corporations cannot be created in a fiscal paradise, and they must maintain assets that 4.3 Branches of Foreign Companies exceed the value of those to be invested in Argen- In order for a company to be able to operate as a tina, among other assumptions (we suggest that, branch, it is necessary to prove the existence of before choosing an investment company, eligibil- the parent company abroad.