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January 6, 2021

Argentina issues decree on promotional regime for knowledge-based economy

On 21 December 2020, Argentina’s Executive Power published, in the Official Gazette, Decree 1034/2020 (Decree 1034) to implement the provisions of the promotional tax system applicable to the knowledge-based economy. For more information on this regime, see EY Global Tax Alert, Argentina amends promotional tax system for the knowledge-based economy, dated 29 October 2020.


On 26 October 2020, Argentina enacted Law 27,570, which amended the promotional regime by imposing new requirements to qualify for the regime and modifying certain benefits. The regime’s objective is to promote knowledge-based and digital activities in Argentina that result in the manufacturing of goods, the provision of services or the improvement of processes.

Decree 1034

Decree 1034 establishes that exports of services from companies participating in this regime will not be subject to export duties.


Eligible companies must enroll in a special registry according to the terms and conditions to be established by the Application Authority, which will annually verify compliance with the requirements.

Under the decree, taxpayers must satisfy a main activity requirement to qualify for the regime. The main activity requirement is satisfied if, at the moment of registering for the regime, the taxpayer derived at least 70% of its revenues in the previous year from one or more of the promoted activities listed in the law.

The decree also establishes the mechanism for calculating the level of investment in research and development, and the level of employee retention, employee training and exports, among others.

Tax benefits

The decree clarifies that the special tax credit bond equal to 80% of the amount payable as Social Security contributions for certain groups of employees working in the promoted activities (e.g. women, postgraduates, disabled and others) only applies for the first 24 months of recruiting those employees.

For exporters to obtain the exemption from value-added tax withholdings and reverse withholdings, exporters must have performed at least one export in the three months before registering for the regime.

The decree clarifies that eligible companies may transfer the tax benefits to a different legal entity in a tax-free reorganization.


The decree establishes that companies participating in the promotional regime will have to pay a fee calculated on a percentage of the tax savings obtained from the regime, as follows: micro enterprises 1%, small and medium enterprises 2.5% and large enterprises 3.5%.


Companies doing business in Argentina and multinational groups interested in the Argentine market should evaluate the new promotional regime and assess the potential benefits to their operations and activities.


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 Abogados, Latin American Business Center, Madrid
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific



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