Daily Archives: 12 July, 2010

Argentina – Investment incentives

Argentine legislation includes norms designed to encourage development in specific areas of the economy. This section current investment incentives:

Investment Incentives for Capital Goods and Infrastructure

Regulatory Framework: Law Nº 26.360
Main Characteristics: On April 2008, the Executive Branch has implemented Law 26360 to grant investors the benefits of:
• Accelerated reimbursement of value added tax (VAT) paid on purchases of capital goods and other
materials related to investment projects; and/or
• Accelerated depreciation for machinery and equipment related to investment projects
• Accelerated depreciation reduces the tax burden during first years of the project.
Export-oriented projects and those that are environmentally friendly may apply for both incentives; for other types of projects, companies have to choose one. The law will be in force until September 2010.
For further information please contact http://www.infoleg.gov.ar

Exemption from Import Duties on Capital Goods
Regulatory Framework: Resolution Nº 8/2001 as amended, Decree 509/2007 and Resolution 15/2007 (MECON)
Main Characteristics: Tax-free imports of capital goods: resolution 8/2001 of the Ministry of Economy and Production sets a 0% import duty on a broad range of capital goods–most of these goods fall under chapters 84, 85, 86, 87, 89, 90 and 94 of Mercosur’s Harmonized Tariff System (HTS). The exemption applies only to
imports of new equipment.
For further information please contact Customs Administration http://www.afip.gov.ar

Reduced VAT on Capital Goods
Regulatory framework: Decree 493/2001, Decree 496/2001, Decree 615/2001, Decree 733/2001 and Decree 959/2001
Main Characteristics: Reduced VAT (10.5% compared to 21%) on the sale or import of finished capital goods and computer and telecommunications hardware (including parts and components).
For further information please contact Federal Administration of Public Revenue http://www.industria.gov.ar

Incentives for national production of capital goods, IT, telecommunications and agricultural machinery
Regulatory Framework: Decree 379/2001 as amended and Decree 2316/2008
Main Characteristics: The incentives regime for investment and national production of capital goods and agricultural machinery establishes a 14% reimbursement for local producers in the form of a fiscal bonus that may be used to pay VAT, income taxes, asset taxes and excise taxes.
For further information please contact Secretary of Industry, Trade and Small and Medium-Sized Enterprises http://www.industria.gov.ar

Import Regime for Large Industrial Investment Projects
Regulatory framework: Decree 256/2000 as amended
Main Characteristics: Zero tariffs for imports of capital goods that are part of an autonomous and complete production line. The regime allows to import spare parts up to 5% of the line’s FOB Value.
For further information please contact Secretary of Industry, Trade and Small and Medium-Sized Enterprises http://www.comercio.gov.ar

Import Regime for Used Capital Goods
Regulatory Framework: Resolutions 511/2000, 157/2003, 255/2003, 353/2004, 78/2006, 86/2007, 18/2007, 40/2008 and 42/2008
Main Characteristics: The regime allows imports of used capital goods classified under chapters 84-90 of the HTS. These goods will pay a reduced tariff of 6% compared to the common 28%, with the condition that they form part of an autonomous production line.
For further information please contact Secretary of Industry, Trade and Small and Medium-Sized Enterprises http://www.comercio.gov.ar

Temporary Import of Capital Goods
Regulatory Framework: Law Nº 22.415, Decree 1001/1982, and DGA Disposition 34/1998.
Main Characteristics: The regime allows the temporary importation of capital goods to a customs area, with a specific purpose and for a stipulated period of time. Once in customs, capital goods should be re-exported before the pre-specified due date.
For further information please contact Customs Administration http://www.infoleg.gov.ar

Sector Incentives

Automotive and Autopart Promotion Regime
Regulatory Framework: Law Nº 26.393
Main Characteristics:
• Cash reimbursement: through Decree 774/05, the Argentine government implemented a program of fiscal benefits for vehicles produced domestically and that have imported parts whose value do not exceed 30% of the wholesale price of the final product. Specifically, a company manufacturing vehicles in Argentina will receive a cash reimbursement equivalent to 8% of the value of the locally produced parts being purchased. This percentage will be reduced to 7% in the second year of production and to 6% in the third year.
• The “Flex” Mechanism: Argentina and Brazil signed an agreement in June 2008 which was implemented in July 2008 and will be terminated in June 2013. The “flex” mechanism, which determines the level of bilateral trade flows that are tariff-exempt, was modified from US$ 2.6 of Brazilian imports for every US$ of Argentine exports to the current level of US$ 1.95. Tariffs will apply when this level is exceeded. The Common External Tariff (CET) was maintained between 14 and 16%.
• Trade with Mexico: In 2006, Argentina and Mexico eliminated all bilateral trade barriers in automobile trade. Furthermore, in June 2006 Argentina and Mexico eradicated hundreds of tariff items in the autoparts sector.
For further information go to http://www.industria.gov.ar

Software Industry Promotion Regime
Regulatory Framework: Law 25922 and Law 25856
Main Characteristics:
• Software design, development and production are considered to be industrial activities for tax or credit purposes and any other kind of benefits the national government may provide to the industrial sector. Law 25922 specifies the most important incentives for the software industry: • Ten year fiscal stability including national direct taxes, duties and special contributions, meaning a company’s aggregate national tax liability will not be increased over the mandated period once it is accepted into the program.
• Non-refundable and non-transferable fiscal credit for employer social security contributions paid (up to 70%), which may be used to pay federal tax liabilities, excluding the corporate income tax (CIT).
• A 60% reduction of a company’s CIT liability during each fiscal period will be granted if they can prove they have incurred expenses related to research and development and/or quality certification processes and/or export of software in the terms and conditions to be set forth.
• Exemption from import duties on hardware and IT components.

Requirements:
• More than 50% of the employees or the company’s total wage expenditures must be related to software development activities.
• Software development must be the company’s main activity (software developed for inhouse use is excluded from the benefits)
For further information please contact Secretary of Industry, Trade and Small and Medium-Sized Enterprises Ministry of Production http://www.industria.gov.ar

Promotion of State-of-the-Art Biotechnology Development and Production
Regulatory Framework: Law 26270
Main Characteristics: Law 26270 offers the following incentives on the research, development and production of biotechnology applicable to certain production processes:
• Accelerated depreciation of capital goods, equipment, parts and components
• Early reimbursement of VAT paid on the purchase of capital goods, equipment, parts and components.
• Listed property shall not be taxable under the minimum presumed income tax.
• Fiscal credit on employer’s social security contributions paid (up to 50%)
• Fiscal credit for purchases of research and development services from institutions under the science, technology and innovation national public system (up to 50%)
For further information http://www.infoleg.gov.ar

Biofuel Promotion Regime
Regulatory Framework: Law 26093, Executive Order 109/2007
Main Characteristics: The public sector recognizes Argentina offers opportunities for biofuel development and has provided a national law to promote biofuels (Law 26093 ruled by Decree 109/2007). Starting in 2010, the law establishes an obligatory blend of 5% of biodiesel for diesel fuels and of bioethanol for gasoline. The law also grants the following fiscal Incentives:
• Early reimbursement of VAT and/or accelerated depreciation allowance for capital goods and infrastructure
• Exemption on the minimum presumed income tax (tax paid on a company’s estimated annual revenue and that can be deducted at time of the CIT submission) for the first three years
• Exemption on the hydro infrastructure tax and the liquid fuels and natural gas tax.
For further information on technical aspects contact the Ministry of Federal Planning, Public Investment and Services http://www.minplan.gov.ar
For further information on taxation issues contact the Federal Administration of Public Revenue

Mining Promotion Regime
Regulatory Framework: Law 24196, Law 25429, Law 25161, as amended. Law 1919, Executive Order 456/1997, Law 25225
Main Characteristics: It offers the following fiscal incentives for mining activities:
• Double deduction of exploration expenses: including feasibility studies, prospecting, exploration, special studies, pilot plant tests, applied research and other tests.
• VAT reimbursement: VAT credits on all exploration expenses will be reimbursed after a twelvemonth period. Also, there are extraction and production incentives:
• Fiscal stability: once a company’s feasibility study is submitted to and approved by the National Mining Authority, a 30-year fiscal stability period will be granted.
• Accelerated depreciation: investment made on equipment, construction and infrastructure can be depreciated during the first three years of operations. Fixed assets, including machinery, vehicles and facilities can be depreciated at one-third of their value per year beginning with the startup year.
• Duty exemptions on imports: registered mining companies are exempt from any import duty or tariff on capital goods, special equipment or parts and any inputs to be used in the development of the mining process. Companies in mining-related services may also apply for this benefit.
• Tax exemptions and deductions: earnings derived from mining rights that are used to increase equity are exempt from CIT. In addition, companies are exempted from the minimum presumed income tax. Also, firms may have access to tax exemptions at provincial and municipal levels.
• VAT refund: applies to the purchase or import of new capital goods and investment in
infrastructure to be used as part of the mining production process.
For further information contact the Office of the Secretary of Mining & Ministry of Federal Planning: http://www.mineria.gov.ar

Forestry Regime
Regulatory Framework: Law 25080, Law 25509
Main Characteristics: Law 25080 grants the following fiscal and economic benefits to forestry-related investments:
• Fiscal stability: a 30-year period of fiscal stability is granted by the national government. This 30-year period may be extended an additional 20 years.
• Accelerated Depreciation: investment in equipment, construction and infrastructure can be depreciated during the first three years of operations. Fixed assets, including machinery, vehicles and facilities can be depreciated at one third of their value per year beginning with the start up year.
• VAT refund: applies to the purchase or import of goods or services to be used in the production process.
• Non refundable financial aid: companies that own less than 500 hectares can receive non refundable financial aid on a per hectare basis, in an amount that depends on the region, tree specie and the specific forestry work to be performed.
For further information got to http://www.sagpya.gov.ar

Hydrocarbon Exploration and Exploitation Incentive Program
Regulatory Framework: Law 26154
Main Characteristics: All the areas granted under Law 25943 and those with a geological potential over which there
are no current third-party rights granted by Law 17319 are part of the promotion system. They
follow the categorization below: areas in the continental shelf, 15 years; areas in non-developing
sedimentary basins, 12 years; areas in developing sedimentary basins, 10 years.
The benefits of the current system are:
• Early VAT refund: the early credit or refund provided for by Law 25924 will be applicable to the total amount of expenditure and investment made during the exploration phase and investments made during the exploitation phase.
• Income Tax: all expenses to be capitalized and investments made during the exploration phase and the investments made during the exploitation phase will be depreciated in three annual identical and consecutive portions, counting from the year when such expenditure and investment were incurred and made.
• Assets belonging to companies with exploration permits and exploitation concessions granted under this law will not be considered in the calculation of the taxable base for the minimum presumed income tax for a maximum of three years as from the award date.
• Exemption from payment of import duties and any other duty, levy or rate for imports of capital goods not manufactured in Argentina that are necessary for exploration.
For further information contact Secretary of Energy and Mining http://www.minplan.gov.ar

Public Infrastructure Works
Regulatory Framework: Executive Orders 966/2005 and 967/2005
Main Characteristics: Two alternative plans have been defined to promote private involvement in infrastructure works to promote investment in infrastructure in the country.
• National Regime for Private Initiatives: to promote private capital involvement in the execution of public infrastructure works, concessions, public utilities or licenses. Submission of projects is spontaneous and, should the government consider a proposal to be of public interest, it will call for bids. The particularity of this regime is that whoever proposed the project has first priority to be awarded the bid.
• Regime for Private-Public Cooperation: the government becomes involved in projects as a partner. The association can take any form permitted under Argentine legislation. The government’s contribution can be realized through a cash injection, tax benefits, rights granted to public assets or other assets pertaining to government ownership, etc. In this case, projects are presented by government agencies and bids are called to select the private partner.
For further information go to http://www.infoleg.gov.ar

Provincial and Regional Incentives

Provincial Incentives

It is possible to obtain fiscal incentives under promotional schemes sponsored by various provincial governments. There are differences among these regimes but generally they take the form of a waiver, exemption or reduction in local taxes (turnover tax, stamp duty and real estate tax), support for infrastructure and equipment purchases, and/or preferential treatment for the purchase, rental or lease of public property.
Access to these regimes is evaluated on a case-by-case basis with each specific provincial government. At the same time, provinces have business support infrastructure such as industrial parks.

Free Trade Zones (FTZ)
Regulatory Framework: Law 24331 as amended
Main Characteristics: Free Trade Zones offer exporters the possibility to import the necessary equipment to build a “turnkey operation” within the FTZ free of customs duties, statistical fees and VAT. Furthermore, exporters manufacturing within the FTZ enjoy the benefit of buying supplies and raw materials from
third countries without having to pay duties.
By exporting through a FTZ, companies not only are exempt of all export duties but also they enjoy all other available incentives at the national level. In addition, companies operating in a FTZ may face lower production costs, due to the VAT exemption and lower internal taxes on utilities such as electricity, gas, water, and telecommunication.
Currently, there are FTZs in Buenos Aires (La Plata), Córdoba (Córdoba), Chubut (Comodoro Rivadavia), La Pampa (General Pico), Mendoza (Luján de Cuyo), Misiones (Puerto Iguazú), Salta (General Güemes), San Luis (Justo Daract), and Tucumán (Cruz Alta).
For further information contact Secretary of Industry, Trade and Small and Medium-Sized http://www.comercio.gov.ar

Innovation and technological development incentives

Argentine Technology Fund (FONTAR)
Main Characteristics: It supports projects designed to improve productivity in the private sector through technological innovation. There are various funding facilities available through public calls for applicants or permanent window submissions.
For further information contact National Promotion Agency of Science and Technology http://www.agencia.mincyt.gov.ar

Software Industry Fiduciary Fund (FONSOFT)
Main Characteristics: The fiduciary fund created by Law 25922, grants credits to:
• Research and development programs, related to activities included in the Software Promotion Regime (software systems design, development, production and implementation)
• Tertiary or high-level training programs
• Programs intended to improve the quality of design, development and production of software processes
For further information contact the National Promotion Agency of Science and Technology http://www.agencia.mincyt.gov.ar

Scientific and Technological Research Fund (FONCYT)
Main Characteristics: The fund supports research projects aiming to create new scientific knowledge and technological
know-how. There are various promotion instruments and funds awarded, in all cases, through government bids for applicants.
For further information contact the National Promotion Agency of Science and Technology http://www.agencia.mincyt.gov.ar

Federal Science and Technology Council (COFECYT)
Main Characteristics: COFECYT promotes a harmonious development of scientific, technological and innovative activities nationwide. The council has various funding facilities available: institutional strengthening projects; federal production innovation projects (PFIP); federal projects for productive innovation-productive interlinking (PFIP-ESPRO).
For further information go to http://www.cofecyt.secyt.gov.ar

Promotion and Encouragement of Technological Innovation
Main Characteristics: The National Executive Branch annually sets out a quota of tax credits that can be used to pay national taxes (income tax), for an amount no higher than 50% of the project’s total investment, and are to be used in equal parts over a three-year period. Furthermore, contributions from the National Treasury can be provided, which will be awarded to be paid back without accruing interest.
For further information go to http://www.mincyt.gov.ar

Main Employment and Training Incentives

Programs Administered by Ministry of Labor (ML)

Benefits for Hiring New Employees
A company hiring a beneficiary of the Employment and Training Insurance (ETI) could deduct from the worker’s net salary the amount received in the form of ETI. In addition, there will be a reduction in employer’s contributions given that those will be calculated based on the salary actually paid by the company, not including the amount covered by the ETI.

Amounts to the deducted for those benefiting from ETI:
1. Up to 45 years old:
• Women: AR$400 from months 1 through 3 and AR$600 from months 4 to 6.
• Men: AR$400 during the first 6 months
2. Older than 45 years old:
• Women: AR$400 from month 1 to 3; AR$600 from month 4 to 6; and AR$800 from months 7 to 9.
• Men: AR$400 during the first 9 months.
Program for More and Better Employment (YPMBE)
A company hiring a beneficiary of the Young’s Program for More and Better Employment (YPMBE) could deduct from the
worker’s net salary an amount of AR$400 which will be paid by the ML in the form of direct payment for a period of 6
months.

Benefits for Training People
A company providing training to a beneficiary of the Employment and Training Insurance (ETI) could deduct from the worker’s
net salary the amount of AR$400 to be paid directly by the ML. In addition, the ML will reimburse AR$150 for 4 hours/trainer
in a monthly basis and AR$225 for 6 hours/trainer/month during the whole training period.

Fiscal Credit
A company may obtain up to a AR$300,000 fiscal credit (Fiscal Credit Certificates) when incurring expenses related to
strengthening the skills of employed and unemployed workers. In case of a small and medium size enterprise (SME), the
fiscal credit would amount to 8% of the total amount paid in annual wages and salaries, including employers’ contributions.
For large enterprises, the fiscal credit will amount to 8 per thousand of the total amount paid in annual wages and salaries,
including employers’ contributions.
Training Qualifying for the Benefits:
• Professional Training
• Basic Concepts in Information Systems
• Certification of primary, secondary, tertiary, and superior education programs
• Evaluation and Certification of specific skills
• On the job training

Sector Trainning
A company may design a customized training program to satisfy its own needs and that will be in line with sector needs. In
that case, the ML could cover the cost of hiring trainers, teaching materials, equipment, and travel, among other items.

Financial programs

National Bank Credit Lines
Main Characteristics: Banco de la Nación Argentina, the national bank, grants credit lines to SMEs, including credits to purchase capital goods, working and investment capital (to cover production and sales expenses); financing of imports and tourism (including the construction of new hotels, facilities and equipment). It also provides leasing and sale and factoring services for SMEs.
Agency: Banco de la Nación Argentina http://www.bna.com.ar

Credit Lines for Investments from the Investment and Foreign Trade Bank (BICE)
Main Characteristics: BICE’s objective is to promote productive investments and Argentine companies’ foreign trade. BICE, among other things, grants credit lines to purchase imported and local capital goods, and provides financing for assets and service investment projects, as well as productive upgrading.
Agency: Banco de Inversiones y Comercio Exterior http://www.bice.com.ar

Federal Investments Fund
Main Characteristics: A financial instrument of the Federal Investment Council (CFI) designed to assist the private sector through credit lines for the deployment of specific projects or programs at pre-investment and investment stages.
Agency: Consejo Federal de Inversiones (Federal Investment Council) http://www.cfired.org.ar

Government-Subsidized Credit
Main Characteristics: To facilitate SMEs’ access to credit, the government has created a system through which it takes over part of the financial cost of loans banks grant to Argentine SMEs.

Funding may be allocated to:
• Purchasing new capital goods by means of a loan or a lease and sale facility, to working capital, the prefinancing and funding of asset and service exports.
• Creation and development of new ventures
• Industrialization of assets and services developed through technological innovation.
• Scientific and technological research, production upgrading and innovation.
For further information please contact: http://www.sePyME.gov.ar

National Development Fund for Micro, Small and Medium-sized enterprises (FONAPyME)
Main Characteristics: The objective of the National Development Fund for MiSMEs (FONAPyME) is to make capital investments and provide medium and long term funding. It is designed for the existing or future micro, small and medium-sized enterprises and other partnering efforts. Loans are multi-sector allocated and investments are intended for brand-new and used fixed assets, as well as for working capital for projects. They are oriented toward the domestic market, especially emphasizing import substitution with a high impact on regional development, job creation and added value.
For further information please contact: http://www.sePyME.gov.ar

Export promotion

Export Refunds
Regulatory Framework: Executive Order 1011/1991, Executive Order 2275/1994, Executive Order 690/2002.
Main Characteristics: The export refunds consist in the total or partial refund of amounts withheld paid at the various production and trading stages for locally manufactured brand-new goods to be exported. This is compatible with other export promotion systems. The VAT credit refund for purchases linked to exports may be recovered through one of the following mechanisms:
• Offset: against own debits produced by transactions in the domestic market.
• Accreditation: against other tax liabilities generated by transactions and owed by the exporter as taxes to DGI (Internal Revenue Service).
• Transfer: of the VAT credit to another taxpayer.
• Refund: in cash or in securities.
For further information contact Customs Administration http://www.afip.gov.ar

Draw Back
Regulatory Framework: Executive Order 177/1985, Executive Order 1012/1991, Executive Order 2182/1991, Resolution 177/1991, Resolution 288/1995, Resolution 1041/1999, Executive Order 313/2000.
Main Characteristics: This system allows for the total or partial recovery of customs duties and VAT paid for imported goods that have been industrially improved and exported for consumption in third countries.
For further information contact Customs Administration http://www.afip.gov.ar

Temporary import admission for industrial improvement purposes
Regulatory Framework: Executive Order 1330/2004 as amended.
Main Characteristics: The temporary import without payment of customs duties of goods which are to be industrially
improved, subject to the requirement the goods be re-exported in the new resulting form of the item for consumption overseas.
For further information contact Secretary of Industry, Trade and Small and Medium-sized Enterprises http://www.comercio.gov.ar

Turnkey Export Contract
Regulatory Framework: Law 23101, Executive Order 870/2003, Resolution 12/2004.
Main Characteristics: Exports in the turnkey fashion (including related services) receive a predetermined reimbursement.
For further information contact the Office of the Secretary of Industry, Trade and Small and Medium-Sized Enterprises http://www.comercio.gov.ar

Factory Customs (RAF)
Regulatory Framework: Executive Order 688/2002, Executive Order 2722/2002, Joint Resolution 14/2003 – 1424/2003, Joint Resolution 54/2003 – 1448/2003, Resolution 1553/2003.
Main Characteristics: The Factory Customs System (RAF) provides for a more straightforward and expanded temporary imports system. It allows companies under the system to import certain goods and add them to products for export, re-exporting them without any transformation or importing them for
consumption, paying no taxes until the transactions are complete.
For further informationcontact the Federal Administration of Public Revenue, Office of the Secretary of Industry, Trade and Small and Medium-Sized Enterprises
http://www.afip.gov.ar

In-House Customs
Regulatory Framework: Resolution 596/1999, Resolution 800/2000, Resolution 14/2003.
Main Characteristics: Under this regime, goods can be imported or exported directly from the company’s warehouse. The payment of duties and tariffs is made when goods leave the warehouse to be imported for consumption or when they are exported. The company is required to have a pre-specified sales volume and a clean fiscal track record to apply for the benefits.
For further information contact Customs Administration http://www.afip.gov.ar

If you want to invest in Argentina, Uruguay, Chile or Brazil contact us at:

felipegonzalezvergara@gmail.com

Living in Argentina

Quality of life

The quality of life in Argentinais among the highest in the region and recognized worldwide. The 2009 Qualityof Life Index published by InternationalLiving ranked Argentina in 21st place among 194 countriesincluded in the survey, and placed it first among its peers in Latin America.Argentina is also included in the High Human Development category of the UNDP’sHuman Development Index (2009).

The Economist’sMost Livable Cities Index 2009 declared Buenos Aires as Latin America’s bestcity to live in, while Prices and Earnings UBS2009 established that the purchasing power of Buenos Aires residentsis higher than that of citizens living in any other capital in the region.

Transportation

By air
Argentina has a modern air infrastructure: 58 airports, 23 of which are international. The Ministro Pistarini airport in Ezeiza, 22 km from the City of Buenos Aires connects directly to every major destination throughout the Americas and Europe. Because the country is so vast, air travel is a convenient option for travel and Buenos Aires is well connected to the other major cities in Argentina.

By land
There is a broad network of well-marked signposted national and provincial roads linking the main towns and villages throughout the country. Long-distance buses are an excellent travel option as they offer an extremely high standard of service and comfort. For long journeys, passengers can travel in fully reclining sleeper seats with a meal service not unlike flying first class on an international airline. There are also several international car hire agencies to choose from throughout the country.

By train
Rail is the main transport and communications network linking the City of Buenos Aires to its suburbs and the towns in the province of Buenos Aires, as well as some towns in other provinces. Others cover relatively short distances and are run for tourists: Tren de las Nubes, (the Train of the Clouds) in the province of Salta which climbs high up into the Andes and Tren del Fin del Mundo, (Train to the End of the World) which runs through a national park in Tierra del Fuego.
In the City of Buenos Aires, the subway and buses (colectivos) are the most popular means of transport, while many people also use taxis or cabs.

By sea and river
The country’s most important port, Buenos Aires, receives ocean and river vessels and is the arrival and departure base for a large part of the country’s trade. There are also major sea ports in La Plata, Bahía Blanca, Neuquén, San Antonio Oeste and Puerto Madryn. The main river ports are on the Paraná River, including Rosario, San Lorenzo, Santa Fe, Barranqueras, San Nicolás and Campana.

Communications

With a modern and competitive communications network, the country has the highest density of fixed and mobile lines in South America and the highest broadband penetration in the region (Cisco Broadband Barometer 2008). There are over nine million Internet users in the country and more than 500 WiFi locations in the main cities, in hotels, restaurants, bars and even the subway. Buenos Aires is recognized as the WiFi capital of Latin America with the highest concentration of wireless hot spots per inhabitant, surpassing cities such as Sao Paulo, Mexico City and Santiago de Chile. (Clarin iEco, November 2009).

Education system

Argentina’s education system is recognized for its high standards and boasts many prestigious international institutions, many of which are bilingual, trilingual or international (English, German, French, Italian, Hebrew, Japanese and Chinese, among others). Most of these establishments provide students with the opportunity to take the necessary exams to enter university programs abroad as well as enabling students to acquire the same qualifications as their peers in the countries of origin.

Health system

There are approximately 18,000 healthcare institutions distributed among the public and private sectors. Doctors and the healthcare services, which are accessible at affordable prices, hold well-deserved reputations for excellence. In fact, over the last few years, medical tourism has increased significantly with many patients flying in from other countries to receive treatment.

Real estate

As regards the real estate industry, there are countless residential options for visitors such as short-term rentals in modern towers with a full range of in-house facilities including swimming pools, tennis courts, gyms, movie theaters, restaurants, parking, laundry services and even child care facilities. There are also smaller units close to public transport hubs, or houses in residential districts. The cost per square meter varies significantly according to the kind of building and its location. There is an ample selection of real estate agents, many of which operate online, to make the process easier.

Eating out

Argentines are known for eating well, reflected in the vast array of restaurants, bars and gourmet food shops to be found in Buenos Aires and also in many other parts of the country, offering not only local delicacies but also international dishes. The range of options is broad and tempting: Italian trattorias, French bistros, Peruvian fusion, Japanese sushi bars, Mexican eateries, and several signature cuisine restaurants featuring highly accomplished chefs, as well as delicatessen shops and bakeries. Throughout the country, visitors can enjoy the popular Argentine specialties which have made its culinary reputation such as empanadas (meat turnovers), asado (barbecue) and a selection of outstanding wines.

Entertainment

Argentine cities offer a rich and varied assortment of cultural activities to suit all tastes: 928 museums, 2,813 playhouses and 448 movie theaters offer a program of national and international exhibitions and shows for adults and children alike. Activities and entertainment options are of extremely high quality, varied and very accessible in terms of costs. The government supports and encourages cultural activities; for example, the 2,191 public libraries in Buenos Aires, chosen by UNESCO to be “World Book Capital 2011”.

National holidays

If you want to invest in Argentina, Uruguay, Chile or Brazil contact us at:

felipegonzalezvergara@gmail.com

Argentina – Tax system

In Argentina, tax revenue is collected by the Argentine government, the provinces and municipal authorities. The tax system is structured on the basis of dues levied on income, wealth and consumption.

National taxation

At a national level, the Federal Administration of Public Income (Administración Federal de Ingresos Públicos – AFIP), the independent entity which answers to the Ministry of Economy and Public Finance, is responsible for the taxation of income, wealth and consumption. The main taxes levied at national level include: Income Tax, Value Added Tax, Presumed Minimum Income Tax, Internal Taxation, Personal Estate Tax, and Taxes on Debits and Credits in Bank Accounts and Other Operations.

Income tax: All income, including capital gains, is subject to this tax. Companies resident in Argentina pay taxes on their global income, although they may submit as payment on account of these taxes those amounts effectively paid as similar taxes on their activities abroad up to the limits established of the increase in tax obligations arising from the incorporation of the earnings gained abroad. Argentines and nationalized foreigners, foreigners with permanent residence in the Argentine Republic or those who have legally resided in the country for twelve months are considered residents, as are the following; the undivided estate of taxpayers who fulfill the condition of Argentine residents on the date of decease; incorporated business companies and other business forms (one-person companies, civil associations, foundations, etc.) established in the country. Branches established in the Argentine Republic of 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-resident companies is 35% of total earnings. Non-resident companies that do not own branches or any other permanent establishments in the Argentine Republic are only subject to taxes on income earned in Argentina. The tax is withheld by a payment agent in Argentina according to a taxation scale dependent on the kind of income. These taxes arise from the application of a 35% levy on presumed earnings as established in the Law on Income Tax.

Double Taxation Treaties: The Argentine Republic has signed Broad Agreements with different countries in order to avoid double taxation. The agreements seek to avoid companies or individuals being taxed twice with regard to income, capital and/or wealth taxation.

Value added tax (vat): VAT is a tax applied on the price of the sales of goods and services at each stage of the commercialization process, taking as payment on account the amounts erogated by the payment of this tax during earlier stages in the process. General VAT is 21% while the differential VAT rate is 10.5%, half the general rate. The latter is applied to different goods and services: the sale of capital goods, transport (except for international travel, the sale of newspapers, magazines, brochures and periodicals, prepaid health coverage and interests on foreign and domestic bank loans. Imports are also subject to this tax at the same rates as domestic goods or services. Exports are not taxable and exporters may thus apply for VAT refunds on their purchases. The provision of certain services such as electricity, natural gas and water to properties not for residential use is subject to greater taxes. Payments must be made monthly, unlike fiscal credits arising from purchases and fiscal debt arising from sales operations.

Tax on Presumed minimum Income: This tax is applicable to all assets (located both in the Argentine Republic and abroad) of Argentine companies at an annual rate of 1%. It is also applied to goods located in Argentina which are the property of permanently-established foreign individuals or entities. The amount to be paid as Income Tax is considered as payment on account for this particular tax. If the Income Tax to be paid is greater than the Tax on Presumed Minimum Income, only the former is to be paid. If, however, the Tax on Presumed Minimum Income is greater than the Income Tax established, the excess may be used for a maximum period of 10 (ten) years to compensate for the potential overcharge of Income Tax defined concerning the allowance mentioned in the first instance. The calculation of tax credits for parallel taxes paid abroad for goods located outside Argentine territory may be admitted. Similarly, advances received on account of the taxes to be levied in each tax period should be recorded.

Tax on Personal estate: This is a wealth tax as it is applied to personal goods owned up to December 31 each 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 of a sum equivalent to 0.5% of their personal estate with a value of between AR$ 305,000 and AR$ 750,000. Amounts over this figure and up to AR$ 2,000,000, are taxed at 0.75%; from AR$ 2,000,000 to AR$ 5,000,000, at 1%, and values over these figures are taxed at 1.25%. It should be noted that subjects established in Argentina are liable for taxes on goods located both in the Argentine Republic and abroad. Individuals domiciled abroad are only subject to taxes on goods located in the Argentine Republic. The regime applied is that of liable proxy subject to a tax of 1.25%. Nonetheless, as from the 2002 tax year there is a presumption in force which does not admit evidence to the contrary, according to which, individuals domiciled abroad or undivided estates established there may indirectly own stock and/or shares in the capital of Argentine companies whose owners are companies or any other kind of legally valid entity, companies, stable establishments, appropriation of wealth or exploitations, domiciled or established abroad. Likewise, as from then, Argentine companies are obliged to calculate and pay the taxes on the stock and/or shares in the capital of Argentine companies as liable proxy, calculating the rate on the basis of a 0.50% charge on the value assigned to the stock/shares (net assets of the Argentine company as of December 31 of each year, excepting certain circumstances).

Internal taxes: These are applied to the consumption of certain products at different rates and according to different payment and declaration regimes. In general, these taxes are applied to manufacturers or importers at the moment of selling their product.

Tax on Debits and Credits in Bank Current accounts: This tax is applied to credits and debits incurred in the bank accounts of the company account holder at a rate of 0.6% for debits and 0.6% for credits. All movements or transfers of money will be taxed at 1.2% when carried out using payment systems which replace the use of banking current accounts. It should be noted that there are certain differential rates and exemptions which may be applied to specific operations. Tariffs on the Import of goods: Import duties are levied at between 0 to 35%, except in specific cases where minimum thresholds are applied or the goods are from a category which receives special tax treatment. Generally, goods from ALADI members are subject to preferences on a percentage basis. As far as MERCOSUR is concerned, import duties for inter-zone trade have virtually been eliminated. At the same time, a common external tariff has been established for goods sourced and originating outside the zone.

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

Provincial taxation

Income tax: All Argentine jurisdictions (provinces and the City of Buenos Aires) apply this tax to the gross income of any company carrying out a commercial, industrial, agricultural, financial or professional activity. The tax is levied on each commercial transaction and no fiscal credits are awarded for taxes paid during preceding stages. The taxes levied differ according to the kind of activity and the Law in force in each jurisdiction varies from 1.5% to 4%. (Primary and industrial activities in general are exempt). The taxes are paid over a calendar year with payments made on a monthly basis or every two months, depending on the jurisdiction.

Stamp duties: These are provincial taxes levied in each province generally applicable to the transactions, partnership agreements and operations of any value in the form of public or private instruments. In general, the tax rate charged is 1% although it may vary according to the deeds and legislation in force in the jurisdiction where the afore-mentioned deeds apply. In the City of Buenos Aires, this tax is only applied to the transfer of ownership for property and lease contracts or the sublet of properties in which commercial activities are carried out. The rate applicable to the transfer of property is 2.5% and to the lease or sublet of the same is 0.5%.

Property tax: Properties in every jurisdiction are liable for annual taxes which are calculated by applying the rates fixed by the Law on the taxation of the fiscal valuation of land free of improvements, and of improvements. Property Tax is a realty tax applied to the value of the land and buildings without taking into account the personal situation of the taxpayer. The amount is set by the application body and is calculated according to the tax laws of each fiscal period which establish the valuation and rate scales to be applied on taxable income according to the system foreseen for each kind of property.

Municipal taxes

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Legal Framework for Investments in Argentina

En In the Argentine Republic, foreign investors and investments are amply protected by the law, supported by a package of national and international measures which place this country in pole position as an attractive destination for foreign investors and investment:

The legal framework for foreign investment in Argentina: equality of treatment with domestic investors

Law on Foreign Investment
The Foreign Investment Law defines the legal framework regulating foreign investment.
This law covers the different ways in which foreign investors may invest capital in Argentina for the purposes of carrying out established activities-in the industrial, mining, agricultural, trade, and financial sectors of the economy, whether directly in the area of services or in other areas related to the production and exchange of goods and services-without prior approval. The Law states that such investors shall enjoy the same rights and be subject to the same obligations as defined for domestic investors by the Argentine Constitution and Laws.

Rights of foreign investors
• Foreign investors may remit abroad liquid profits arising as a return on their investment as well as repatriate their investment.
• They may avail themselves of any of the legal forms of incorporation foreseen by Argentine legislation.
• They may make use of domestic credits and loans with the same rights and under the same conditions as domestic companies of domestic capital. Download our Legal Framework Report for more information.

Legal structures that companies may adopt

The main legal forms of business that foreign investors may establish when installing themselves in Argentina with any degree of permanence include setting up an overseas Branch, the acquisition of stock in an existing company or the creation of a new one.

A) Overseas branches
A Branch is effectively the same company which opens an office in the country. It is not necessary to create a new legal entity. It should be noted that the Branch answers in terms of assets to the total value of the capital owned by company’s Head Office (HO) and not to the value of the branch in Argentina as assigned by HO. The branches of foreign companies are required to register their presence. They may undertake all the activities pursued by HO, in the name of HO and through the person designated as its representative.

B) Registering Branches
The Law of Commercial Companies (LCC) contemplates a broad variety of corporate forms, amongst which the most widely used by foreign investors in Argentina are the incorporated business company (Sociedad Anónima – SA) and the limited liability company (Sociedad de Responsabilidad Limitada – SRL). In these cases, unlike Branch offices, these kinds of companies are only answerable in principle for the capital of the company incorporated or in which stock is acquired. Download our Legal Framework Report for more information.

Legal framework for the hire of personnel

Employment contracts may take different forms.

Forms of hire:
Employment contracts are non-fixed term, unless there is a specific provision to the contrary. The Law establishes a trial period of three months which may be extended to six under a collective agreement.
During this period the employee may be fired without receiving any form of indemnity. Domestic legislation foresees the possibility of part-time employment contracts. Working hours may not exceed 2/3 of a normal working day and the duration of the contract must be fixed by a collective work agreement. A part-time regime does not allow for over-time.

Annual Bonus salary:
The Law provides that full-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% of the highest monthly salary paid during the previous six-monthly period.

Vacations:
The duration of the vacations depends on the length of the working relationship to-date; if this exceeds six months and is less than five years’ service it is 14 days; 21 days if the period served is five to ten years; 28 days if this is 10 to 20 years, and 35 days if the employee’s period of service is 20 years or more. If the employee has been in service for less than six months, he/she may be given one day off for each twenty days worked.
If the contract expires without the employee having taken his/her vacation, he/she must receive financial compensation proportionate to the period worked, as and when this is at least three months.

Redundancy:
Employment contracts must be terminated with prior notice. Prior notice shall be given by the employee 15 days prior to the termination of the contract, while the employer must give 15 days warning when the employee is in the trial period, one month when the employee has been employed for a period not exceeding five years and two months when the period exceeds this.
Redundancy indemnity is equivalent to a twelfth part of the highest basic monthly salary paid to the employee during the last year o during the time worked if this period is less, for each month of work or fraction greater than 10 days.
The highest remuneration which is taken as the baseline may not be greater than three times the monthly average contemplated in the collective agreement applicable to the employee in question.
The minimum indemnity may not be less than two twelfths of the highest basic monthly remuneration paid the employee during the last year of service.
When the employer fires the employee because the latter has committed a work-related offense (of sufficient gravity) which hinders the continuity of the relationship, the latter is not entitled to receive the indemnity provided for by labor legislation.

Minimum Living wage:
In Argentina, the Minimum Living Wage is set by the National Board for Employment, Productivity and Wages, made up of representatives from the trade unions, employers’ associations and the Executive Power. The resolutions passed by this body require a majority vote of two-thirds of its members. Currently, the minimum living monthly wage stands at AR$ 1,400 (USD 364).
The main laws and regulations in force which regulate labor and welfare issues in Argentina are the following:
• Employment Contract Law Nº 20.744;
• Law of Union Associations Nº 23.551 and Decree # 467/88;
• Collective Working Agreements Nº 14.250 and 25.250;
• National Employment Law Nº 24.013;
• Labor Reform Regime Laws Nº 25.013 and 25.877;
• Occupational Hazard Law Nº 24.557;
• Integrated Retirement and Pension Systems Law Nº 24.241;
• Family Allowance Regime Law Nº 24.714; and
• National Health Insurance and Coverage System Nº 23.660 and 23.661.

Working hours :
Normal working hours are 8 hours a day, or 48 hours a week. The working day may be extended to include hours worked over-time which should be paid at an additional 50% of the normal hourly rate.
The hourly rate on Saturdays after 1 pm, Sundays and national holidays is double the normal rate. Night work is permitted but may not exceed the daily period of 7 hours between 9 pm and 7 am.
There are twelve national holidays in the year
* Variable date.
** If this holiday falls on a Tuesday or a Wednesday it is passed to the preceding Monday, and if it coincides with a Thursday or Friday, it is passed to the following Monday.
*** The holiday is celebrated on the third Monday of the month.
Argentina’s National Investment Development Agency -LegaL Framework For Investments In argentIna 1

Social security contributions:
Companies make employer contributions to cover the social security services of their employees. These contributions cover family allowances, medical services, pension plans and unemployment funds. The rates are 27% of the gross salary paid for employers whose main activity is the provision and lease of services, and 23% for other employers.
In order to foster new job creation in Small and Medium-Sized Enterprises, those employers who increase the number of persons in their full-time non-fixed term employment are eligible for a reduction in the social security contribution rates. This discount applies to one-third of the contributions made. At the same time, all the companies based outside the metropolitan area whatever their size may offset against VAT a percentage of the amounts paid as employer contributions.

If you want to invest in Argentina, Uruguay, Chile or Brazil contact us at:

felipegonzalezvergara@gmail.com

Argentina – Economic Overview

Argentina has a highly diversified economy. The primary sector has a very positive reputation worlwide for its high productivity levels. The country’s well-developed industrial base showcases key sectors such as agriculture, automotive, pharmaceuticals and biotechnology industries, as well as the chemical and petrochemical industries, and design, manufacturing and software.

The services sector is gradually developing niche expertise in the more sophisticated segments of the value chain, with a notable growth in software and IT services as well as wide variety of high added-value professional services.

Key sectors

Primary sector
The primary sector—agriculture, animal husbandry, fishing and mining—today represents 11% of the local economy.
The country is a leading producer and exporter of commodities and raw materials, with over 60% of its 280 million hectares dedicated to agricultural production. Worldwide, Argentina is the second-largest producer of honey and mate tea leaf and the third largest of sunflower seeds, lemons and limes. It is also a leading producer of beef, wheat, corn and pears, and it is ranked among the top five exporting countries for honey, pears and soybeans, among others.
The agricultural sector consistently achieves extremely high levels of productivity, reaching higher yields per hectare of soybean and wheat than other major world producers such as Brazil, the United States and Canada.
Argentina also possesses a wealth of mineral resources, mostly concentrated along the Andes mountain range, including significant lead, zinc, tin, silver, potassium, copper and gold deposits. The province of San Juan is home to one of the most important reservoirs of gold and silver on the planet, while to the east of the Cuyo region, with its chalky lime soil, there are major gold, silver, lead and zinc deposits and further to the southeast, copper and molybdenum reserves. The country also has some of the largest lithium deposits in the world, a metal increasingly in demand due to its low environmental impact and utility for cellular phone and car batteries.

Industrial sector
The manufacturing industry continues to represent over 21% of the domestic economy.
Agri-business is a major industry in Argentina, food and beverages in particular. Argentina is the world’s top soybean oil producer and second sunflower oil producer: it also places fifth as a wine producer and is the seventh largest wine exporter. There is a correspondingly greater development of sector-specific technological and biotechnological applications, with over 50 bio-technology companies working for national industries.
The production of clean renewable energies, which shows great potential, is undergoing a period of significant expansion. The country is a contender for third place in the world ranking of biodiesel producers, and aims to be the leading biodiesel exporter by 2010. The capacity to generate wind energy is under development by local companies which have achieved an international reputation among their peers for their activities.
Argentina is one of the main automotive producers in the region. The business is well integrated with a specialized auto parts industry of considerable magnitude. Automotive companies located in Brazil and Argentina have developed a reciprocal manufacturing strategy with the objective of supplying the Latin American market as a whole.

Services
Representing nearly 60% of the economy, the services sector has experienced a period of dynamic expansion over the last few years.
Utilities (electricity, gas and water) and transport services are largely in the hands of private companies and offer highly competitive costs compared with other countries in the region, in particular developed countries.
Argentina is a growing producer of differentiated technological goods and services. It is ranked fourth among global exporters of television content and is well placed as a destination for the outsourcing of professional services with added value, including business process outsourcing (BPO), knowledge process outsourcing (KPO), financial services, design and advertising.

Foreign Trade

Argentine foreign trade has expanded significantly over the last six years. From 2003 to 2008, exports grew at an average annual rate of 18% while imports doubled this figure. The trade balance remained positive throughout. However, due to the drop in global trade resulting from the international economic and financial crisis, both exports and imports experienced a downturn during 2009.In 2009, manufactured goods represented 73% of the country’s total exports. Top of the list were manufactured products of industrial and agricultural origin, between them representing 70% of total exports, followed by raw materials, fuels and energy.Exports
The country’s main export products are soybean derivatives: flour, pellets, oil, and beans. Corn, wheat, transport and cargo vehicles, crude oil and petroleum, sunflower seed oil, ship and airplane fuels and lubricants follow in terms of sales.
Argentina has a diversified export structure: according to the World Bank’s World Trade Indicators for 2008, it places just below Canada and the United Kingdom on the trade concentration index, above countries such as New Zealand, India, Mexico, South Africa and Australia.
Brazil is the country’s leading export partner and receives over 20% of Argentine exports, followed by Chile, China and the U.S.

Imports
Argentina mostly imports capital and intermediate goods which make up 23% and 32% of its foreign purchases, respectively. This is followed, in order of priority, by parts and accessories for capital goods and consumer goods.
The main products imported include transport vehicles and their accessories, diesel fuel, mobile telephones, airplanes and iron ore.
As with exports, Argentina’s main trading partner for imports is Brazil, the source of 31% of domestic purchases. This figure is well ahead of the U.S. and China, a country which has actually doubled its share of the Argentine import market since 2003.
Major recovery is forecast for 2010 in the export and import of goods which is expected to keep the trade balance high. The excellent 2009-2010 harvest means a sharp increase in the shipments of primary and manufactured agricultural products, bolstered by increased industrial exports, particularly from the automotive sector. On the imports side, growth is linked to the increase in domestic demand for consumer goods, industrial supplies and energy.

Investment

The sharp rise in investment from 2003 to 2008 was mirrored by the significant increase in employment, both critical factors required to ensure competitiveness. Growth in Gross Domestic Fixed Investment (GDFI) was driven in particular by productive investment in infrastructure, machinery and equipment. By 2008, investment rates had reached the highest levels recorded in the last 30 years (23.1%).Foreign Direct Investment (FDI) also recovered after 2003, growing uninterruptedly until 2008 at an annual average rate of 43%. In 2008, USD 9,726 million of FDI flowed into Argentina, a year-on-year increase of 50%, contrasting significantly with the downturn of 15% in global FDI flows during this period. This placed Argentina among those countries with the greatest growth in FDI figures in 2008. The composition of FDI also showed improvements, with an increase in the share of greenfield investments (new production plants and expansion of existing capacity).

Both GDFI and FDI suffered from the impact of the international economic and financial crisis in the fourth quarter of 2008 and during 2009. In Argentina, both variables contracted

In 2009, GDFI in Argentina fell by 10.2% year-on-year, although the investment rate represented 20.6% of GDP in constant terms, a similar level to the historical average experienced from 1950 to 2008 and above levels registered during other recent periods of crisis. At world level, investment contracted by 9.8% in 2009 while in Latin America this figure reached 13.6% (World Bank estimates for 2010).

FDI flows to Argentina in 2009 fell by 50% while global FDI flows in the same period experienced a downturn of 39% according to the United Nations Conference on Trade and Development (UNCTAD).

Fiscal policy

After an impressive recovery following the 2001 local economic crisis, the public sector consolidated a strong primary fiscal surplus, averaging 3.3% of GDP from 2003 to 2008 and a financial surplus of approximately 1.5% of GDP, an unprecedented phenomenon in recent fiscal history. The international crisis and the economic slowdown in 2009 impacted on tax accounts, although the primary result remained positive.

Fiscal results of the Public Sector as a percentage of GDP

Period Primary Result
1980 – 1989
-3.9
1990 – 2001
0.2
2002
0.7
2003-2008
3.3
2009
1.5

National debt

At the end of 2001, Argentina declared a default of its sovereign debt payments. In 2005, it carried out a debt swap with an adhesion rate of almost 80%. In the last quarter of 2009, the Argentine Government approved a series of measures linked to the restructuring of the debt (the bondholders which did not enter the 2005 swap known as the holdouts), taking additional steps to normalize its relationship with the international community.
Argentina has followed a debt restructuring policy since 2003. National public debt stood at USD 141.665 billion by the third quarter of 2009, representing 49% of GDP. Total foreign debt, both public and private, stood at 41% of GDP, reflecting a marked drop in external obligations on the part of both the public and private sectors.

Capital Markets

The Argentinecapital markets came into existence almost a century ago, but are still smallin relation to the size of the economy. Stock Exchange operations are overseen by the Securities and ExchangeCommission (Comisión Nacional de Valores – CNV), an independententity with national jurisdiction.The CNV supervises eleven stock exchanges and ninemarkets. The most important include the Buenos Aires Stock Exchange (Bolsa deComercio de Buenos Aires – BCBA), Córdoba, Mendoza, Santa Fe, La Plataand Rosario, the Buenos Aires Stock Market (Mercado de Valores de Buenos Aires – MVBA) andthe Open Electronic Market (Mercado Abierto Electrónico – MAE). Founded in1854, the Buenos Aires Stock Exchange is the oldest of these institutions.

Monetary policy

The Argentine Central Bank is responsible for drawing up and implementing a coherent monetary policy to guarantee a positive balance in the money markets and also encourage savings and investment.
Argentina’s exchange rate is both stable and competitive, with a floating currency managed bilaterally against the dollar as well as against a basket of currencies from its main trading partners. The managed float approach will continue to be one of the pillars of monetary policy designed to diminish the impact of an excessively volatile exchange rate and thus contribute to strengthening the demand for money.
The stock of international reserves has increased steadily over the last seven years, growing from USD 10 billion in 2002 to USD 48 billion in 2010.

Financial system

The financial system possesses adequate levels of liquidity and solvency and is taking steps to reduce market gaps. At the same time, the geographical coverage of the financial services infrastructure in the different jurisdictions throughout the country continues to improve, particularly in the numbers of automatic teller machines (ATM) per capita in the more remote districts.
The Central Bank is responsible for regulating and supervising the financial system in order to guarantee it operates correctly.

Make-up of the Financial System  
Number of Financial Entities 83
Banks 66
Public 12
Private 54
National capital 32
Cooperatives 1
Foreign capital 12
Branches of foreign financial entities 9
Non-banking entities 17
Financial companies 15
Loan companies 2

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Investment – Why Argentina

Talent + Natural Resources To Satisfy Global Demand

Argentina offers a range of profitable investment opportunities to satisfy current world demand. This excellent outlook for businesses is based on the widespread availability of qualified human resources, known for their versatility and talent; the abundance of natural resources and extremely fertile lands; a modern and permanently expanding infrastructure; a macroeconomic context guaranteeing competitive costs and a public sector which actively supports the development of innovative products and services with high added value.

Solid foundations for sustained economic growth

Sustainable growth.
The recovery of the global economy, spearheaded by the emerging economies, presents a favorable scenario for Argentina to consolidate the path of sustainable growth with social inclusion that it was following prior to the eruption of the international financial crisis.
After setting the pace with its annual growth rate of 8.5% from 2003 to 2008 (one of the highest in the world), the Argentine economy has already absorbed the impact of the crisis, and according to a number of different estimates, is forecast to grow by over 5% in 2010.
The relatively limited local impact of the global crisis –both in historical and international terms- has served to highlight the solid macroeconomic foundations underlying the process of recent growth in Argentina. Key factors include the primary and foreign fiscal surpluses (maintained by a highly dynamic export performance), the accumulation of international reserves and the reduction in the effect of national debt on GDP.High level of complementarity with trends in global demand.
The trends emerging from the new international scenario testify to the high degree of complementarity between Argentina’s endowment of skills and capabilities with the consumption and production patterns forecast at global level.
Argentina is well prepared to respond to the growing demands for food products from the more dynamic emerging economies (in particular Asia and the Middle East) as well as from consumers in developed countries seeking products with increased added value, sophistication, traceability and other specific qualities.
The country’s natural and scientific resources are an ideal platform for the development of environmentally-sustainable energy sources, such as biofuels and wind power, which will be necessary to tackle the challenges posed by climate change.
The qualifications and talent of Argentine human resources, in addition to the country’s long tradition of industrial development, position it as a major provider of high value-added professional services (software and IT, design, architecture, the cultural industries and financial services). It also competes at world level as a center for the relocation of different processes involved in the stages of global production chains.
The tradition and excellence of R&D activities in sectors such as medicine, nuclear engineering and biotechnology, together with new developments in the aerospace industry, strengthen Argentina’s potential in the more intensive segments such as technology, knowledge and human capital.

Attractive business profitability

Attractive business results.
Argentina offers investors attractive profitability results in a wide range of sectors. Earnings as a percentage of Foreign Direct Investment (FDI) stock averaged a yearly 10.2% from 2006 to 2008, the highest levels achieved over the last 15 years. Earnings as a percentage of revenues for the 340 largest non-financial companies are also at record levels, averaging 15.4% per year over the 2005-2007 period.
Equal treatment.
By law, FDI receives the same treatment as domestic investment. Remittance abroad of profits and capital is unrestricted. In addition, Argentina has signed 19 bilateral treaties with other countries to avoid double taxation and 55 bilateral agreements for the protection and promotion of investments.

Globally and regionally integrated economy

Open economy.
Busy trade, financial and investment flows link Argentina to both the global economy and the regional economy. Argentina is a founding member of the World Trade Organization and a member of the G20. Exports and imports of goods and services represent almost half of the country’s GDP.An attractive regional market, a global platform.
In addition, Argentina is a full member of Mercosur, the customs union which also includes Brazil, Paraguay and Uruguay. As a common market open to the world, Mercosur guarantees investors in Argentina access to a regional market of 241 million consumers with a combined GDP of USD 1.9 trillion.
Foreign direct investment.
Nearly 2,000 overseas-based corporations operate in Argentina, including half of the Fortune 100 firms, many of which have been operating in the local market for over fifty years.
Transnational companies carry out a wide range of activities in diverse sectors such as agro-industries, automotive, chemicals and petrochemicals, pharmaceuticals, information technology, telecommunications, public utilities, finance and retail.
FDI has grown steadily over the last few years reaching an average annual rate of 43% from 2003 to 2008. In 2008, FDI flows reached USD 9.7, well over the annual average net of privatizations achieved during the 1990s.
In 2009, as a consequence of the international economic and financial crisis, FDI flows towards Argentina fell significantly, in line with the general downturn in investment observed worldwide.

A diversified economy

Value-added products.
Argentina is flourishing as a producer of differentiated goods and services with a significant technological content. It is the world’s fourth-largest producer and exporter of television content; ranking fifth and seventh as wine producer and exporter, respectively, and an internationally-renowned producer of premium quality beef. Furthermore, according to the GUNN Report 2009 (the trade review which analyzes print and TV advertising), Argentina ranks third after the UK and the U.S. as the best place to develop and produce ideas.
The software industry continues to expand with the arrival of some of the world’s leading firms, while exports of high added-value professional and cultural services are multiplying. In 2009, Argentina was fifth in the preferred global location ranking for outsourcing services due to the quality and availability of its workforce, just behind the UK, India, the U.S. and China (Global Shared Services Survey, Deloitte).
A consolidated leader in the food industry.
Argentina is a leading producer and exporter of commodities and raw materials and the world’s number one exporter of soybean oil, pears, honey and lemons among others in a diversified range of agricultural products. Anticipating changing consumption trends in food and nutrition, Argentina now ranks second worldwide in terms of the surface area used to cultivate organic crops.

Skilled and talented human resources

Highly qualified.
Argentina enjoys an international reputation for its highly-qualified human resources. The country ranks second in the region in terms of its literacy rate and school life expectancy, and leads in Latin America with the highest rates of entrance to tertiary education, similar to those in Spain and Italy. The standard of English is the highest in the region, as shown by the results of the exams set by the University of Cambridge English for Speakers of Other Languages (ESOL).
Entrepreneur Driven.
Argentina has a dynamic entrepreneur network flourishing in an ecosystem that promotes creativity and innovation throughout a broad range of industries.
Scientific capacity and innovation.
Argentine professionals are renowned for their capabilities in the areas of science and technological innovation. The number of patents per million inhabitants registered by Argentines with the United States Patent and Trademark Office over the past 45 years (1963-2008) is the highest in the region.

Abundant and diverse natural resources


Natural wealth.
Argentina is one of the planet’s most geographically varied territories, endowed with an abundance of natural resources. It is the second-largest country in Latin America and the eighth in the world.
Argentina possesses a natural heritage of immeasurable value: exceptionally fertile lands, vast stretches of forests, rich mining deposits, a huge network of underground aquifers and plentiful fishing grounds along its Atlantic coast.
The country promotes sustainable development and the protection of its natural resources.

Remarkable quality of life

Live Argentina.
According to the trade publication International Living 2009, Argentina has the best quality of life in the region and ranks 21st among a total of 194 countries included in the magazine’s survey, while its capital Buenos Aires was elected the Most Livable City in Latin America by The Economist in 2009. The range of stimulating cultural and educational activities, sporting attractions and the spontaneous warmth of its people are all major incentives to visit or live in Argentina.

A vibrant culture

Living life and enjoying it.
According to the trade publication International Living 2009, Argentina has the best quality of life in the region and ranks 21st among a total of 194 countries included in the magazine’s survey, while its capital Buenos Aires was elected the Most Livable City in Latin America by The Economist in 2009. The range of stimulating cultural and educational activities, sporting attractions and the spontaneous warmth of its people are all major incentives to visit or live in Argentina.

Quality connectivity and modern infrastructure

Connectivity.
Argentina possesses a modern and competitive communications network. It has the highest density of fixed and mobile lines in Latin America and the highest broadband penetration in the region (Cisco Broadband Barometer 2009). Buenos Aires is the WiFi capital of Latin America with the highest concentration of wireless hot spots per inhabitant, surpassing cities such as Sao Paulo, Mexico City and Santiago de Chile.
Infrastructure.
Argentina has an extensive modern transport infrastructure with over 231,300 km of roads, one of the largest railway networks in the world (31,409 km), 25 sea ports, 38 river ports and 58 airports, of which 23 are international. There are over 25 airlines offering direct flights from Argentina to over 40 destinations in five continents. A strategic investment policy is currently under way in the area of infrastructure to significantly boost the transportation capacity for gas and increase electricity generation capabilities, among other key areas.

Public sector supportive of investment

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Granos al compás del oro negro

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