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January 27, 2020
Argentina suspends promotional regime for knowledge-based economy
On 20 January 2020, Argentina’s Ministry of Productive Development published, in the Official Gazette, Resolution 30/2020, suspending the promotional regime for the knowledge-based economy. For more information on this regime, see EY Global Tax Alerts, Argentina enacts promotional tax system for the knowledge-based economy, dated 14 June 2019 and Argentina issues regulations on promotional regime for knowledge-based economy, dated 22 October 2019.
Law 27,506 created a promotional tax system for the knowledge-based economy, which is effective from 1 January 2020 to 31 December 2029. Among the regime’s benefits are a reduced income tax rate of 15%, reduced social security contributions, exemptions from value-added tax (VAT) withholding and reverse withholding, and a tax credit bond to offset federal taxes. Taxpayers also may be able to credit foreign income taxes against Argentine income taxes due on Argentine-sourced income.
The objective of the regime is to promote knowledge-based and digital activities that result in the manufacturing of goods, the provision of services or the improvement of processes. Some of the activities included in the promotional regime are software development and related activities, audio-visual productions, biotechnology, professional services qualifying as exports, nanotechnology, satellite and aerospace industries, artificial intelligence and robotics.
On 20 January 2020, Argentina’s Ministry of Productive Development issued Resolution 30/2020, revoking Resolution 1084/2019 of the former Ministry of Production and Labor and Resolution 449/2019 of the former Secretary of Entrepreneurs and Small and Medium Enterprises. Those resolutions had established the application process for taxpayers to request the benefits of the regime. The review and processing of applications filed so far have been suspended until new provisions are issued.
Taxpayers should continue to monitor the release of new guidance, so that they can apply for the regime.
For additional information with respect to this Alert, please contact the following:
Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific