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BEPS

Argentina Enacts Regime to Promote Knowledge Economy

Jessica Silbering-Meyer  

Jessica Silbering-Meyer  

On June 10, 2019, Argentina published Decree 408/2019 to enact Law No. 27,506, creating a Regime to Promote the Knowledge Economy (the “Regime”). The Regime will be valid from January 1, 2020 until December 31, 2029.

The Regime will apply throughout Argentina, and aims to promote economic activities that apply knowledge and digitization of information, supported by advances in science and technology, to obtain goods and services and improve processes.

The Regime aims to promote the creation, design, development, production, and implementation of software, computer, and digital services, including:

  • Development of existing and future software products and services (SAAS).
  • Development of original software products that can be registered as an unpublished or edited work.
  • Implementation and development for third parties of software products or those created by third parties.
  • Customized software development that adds value, even if the IP is transferred to third parties.
  • Value-added computer services.
  • Development of parts of systems, modules, routines, procedures, and documentation, provided that they are complementary to recordable software products.
  • Services for software products for external markets.
  • Development and fine-tuning of software designed to be incorporated into processors.
  • Video games.
  • Cloud computing services.

Law No. 27,506 will create the National Registry of Beneficiaries of the Regime for the Promotion of the Knowledge Economy, to which those who would like to access the Regime must register. Access to the Regime may be granted to legal persons incorporated in Argentina or authorized to act in Argentina, to develop in the country on their own as a main activity the activities mentioned above, are registered in the National Registry, and meet at least two of the following requirements:

  • Continuous improvements in the quality of its services, products and/or processes, or by means of a recognized quality standard applicable to its services, products and/or processes.
  • Research and development represents at least 3% of total turnover, and training of employees represent at least 8% of total wages.
  • Exports of goods and/or services that arise from the development of any of the promoted activities represent at least 13% of total billing corresponding to those activities.

The main activity requirement is met when the percentage of turnover in the promoted activities represents at least 70% of total billing.

The beneficiaries of the Regime will be subject to a reduced profits tax of 15%, applicable for fiscal years that begin after the beneficiary’s registration date.

Each beneficiary must pay annually up to 1.5% of the total amount of tax benefits granted under the Regime in the Trust Fund for the Development of Entrepreneur Capital (FONDCE).

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