The Executive Branch filed an initiative to support entrepreneurial activity and entrepreneurial capital development, as well as the creation of a crowdfunding system. Likewise, it foresees the creation of a new corporate type, named Simplified Corporations ("S.A.S" after its Spanish acronym) which stand out for being subject to a more dynamic legal framework and shorter registration terms.
On September 2, 2016, the Executive Branch submitted to the House of Representatives a bill which intends to regulate two main issues: on one hand, support for entrepreneurial activity and, on the other hand, the setting up of a new corporate type: the S.A.S (the "Bill"). Currently, the Bill is under the analysis of the General Legislation, Small and Medium-Sized Enterprises, and Budget and Estate Committees.
Below, we shall make a brief overview regarding the most relevant aspects of the entrepreneurial capital promotion regime. For an overview of the new corporate structure, the S.A.S, please see "Simplified Corporation Bill" in this edition of Marval News.
Registry Creation - Tax Benefit
The Bill aims to support entrepreneurial activity regarding different productive activities through all provinces within the country and abroad, and generate entrepreneurial capital within the country. The enforcement authority is the Entrepreneurs and Small and Medium-Sized Enterprises Secretariat of the Production Ministry.
Entrepreneurial Capital Investors (legal entities, funds, trustees and human persons investing resources in Entrepreneurial Capital or, directly in endeavors in case of human persons) and Entrepreneurial Capital Institutions (Argentine legal entities, funds and trustees with a goal to provide their own or third-party resources, aimed at more than one endeavor) duly registered before the Registry of Entrepreneurial Capital Institutions may access tax benefits indicated as follows:
Venture capital contributions may be deducted from income tax with the following limits: (i) up to 75% of the amount of those contributions, and (ii) up to 10% of the taxable net income of the fiscal year (for taxpayers who initiate their activities, the proportional percentage considering the months of activity should be calculated). This percentage on the taxable net income may be reduced by the Executive Branch. Venture capital contributions that exceed the limits mentioned previously may be deducted from the income tax in the following 5 immediate fiscal years...