Argentina Suspends Promotional Regime Of The Knowledge-Based Economy

Author:Mr Augusto Mancinelli
Profession:DLA Piper

Software companies and others in the knowledge-based economy are noting a surprising development in Argentina, where the tax regime benefiting companies in the knowledge-based economy has been put on hold.

Argentina announced this new tax regime in 2019, aiming to promote digital, information and communication technologies and the highly skilled human capital that creates and advances those technologies. With its broad reach, the new law sought to put Argentina at the forefront of the knowledge economy in Latin America.

The regime applies to software companies and, indeed, any companies in the knowledge-based economy, providing substantial benefits including a reduced income tax rate (15 percent against the 30 percent applicable to other corporations), a reduction of social security contributions, and fiscal stability for 20 years, among other benefits. You may be interested in our initial alert about the regime.

According to statutory Law No. 27,506, this new regime was meant to enter into force on January 1, 2020, and further regulations were issued by the Executive Branch, which appointed the Ministry of Production as the implementing authority.

One specific characteristic of this regime − as it was enacted by statute − is that the benefits are fully granted to any entity which complies with the requirements set out in the law, regardless of any specific feature of the entity, such as its size, yearly revenues or business activities. That is, benefits are exactly the same for large, medium or small companies; the law does not differentiate among them in any way, nor does it delegate to the...

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