Setting up new companies / units / sales units
Doing business in Argentina offers advantages such as stable political institutions, an educated workforce, and lack of racial or religious conflicts. The country covers a vast area of 2.78 million square km with diverse geography and climates, ranging from fertile plains to mountains and temperate zones. Argentina operates as a Federal Republic, similar to the U.S., with a democratic political system. Moderate parties dominate due to steady support for sound economic policies. Recent high inflation led to a scarcity of foreign currency, prompting Central Bank restrictions on foreign currency payments for dividends and goods/services. Despite this, an increase in exports of goods (particularly agribusiness and mining) and services is anticipated in the coming year, potentially alleviating these constraints.
Foreign corporations must register in Argentina before becoming investors in local entities. Most activities do not require prior approval, and repatriation of capital and earnings is allowed (some restrictions must be considered). Some exceptions apply, such as financial institutions and public media.
Argentina treats domestic and foreign companies equally, granting them access to all economic sectors, incentive programs, and state procurement. The country adheres to OECD principles and offers protection through ICSID, MIGA, and Overseas Private Investment Corporation.
Business Entities:
Foreign investors can engage in business in Argentina using various legal structures permitted by law.
Stock Company (Sociedad Anónima):
• Liability limited to capital investment.
• Requires a minimum of two shareholders.
• Directors must be residents in Argentina.
• Statutory auditors ensure compliance with laws and by-laws.
• Dividends depend on earned and liquid profits.
• Registration and approval by Public Registry of Commerce (PRC) needed.
Limited Liability Company (Sociedad de Responsabilidad Limitada):
• Liability limited to capital investment.
• Minimum two and maximum fifty partners required.
• Managers must be mostly residents of Argentina.
• No obligation for annual financial statements if capital is under a certain threshold.
• Dividends linked to earned and liquid profits.
• Organizational contract approval by PRC necessary.
Simplified Stock Company (Sociedad por Acciones Simplificada):
• Liability limited to capital investment, but joint and unlimited liability for capital integration.
• Minimum partners required to set up.
• Managers must be mostly residents of Argentina.
• No requirement for annual financial statements, but digital records needed.
• Dividends tied to earned and liquid profits.
• Approval by PRC and official gazette publication required.
Argentine Branch of a Foreign Company:
• No separate legal entity from the parent company.
• Parent company liable for branch’s obligations.
• Separate accounting required.
• Resident representative appointed by the parent company manages the branch.
• Registration of branch’s articles of incorporation with PRC necessary.
Incorporation and Reporting:
All business entities require registration with relevant authorities for legal existence. Reporting obligations vary among entity types, with different rules for filing annual financial statements.
Argentina offers several tax incentives for various economic sectors. The mining industry benefits from fiscal stability for 30 years, except for VAT. Forestry enjoys similar incentives. Knowledge-based activities, including software and scientific services, gain tax rate reductions and export duty cuts. Renewable energy production companies receive VAT refunds and accelerated depreciation. Biotechnology development grants 29 tax and social security benefits. Small and medium-sized enterprises (SMEs) have exemptions, credits, and deferral of VAT balances. Export of goods and services is VAT and Excise Tax exempt, with raw material imports duty-free for export production. Dividend distributions and profit remittances have a 7% withholding tax. Non-listed shares’ gains are subject to a 13.5% tax on gross profits or 15% on actual profits.
Doing business with Argentinean counterparts
Argentina, a significant economy in Latin America, has deep European roots, particularly from Spain and Italy, resulting in Spanish being the predominant language.
Cultural diversity, strongly influenced by European traditions, is evident in the vibrant arts scene, notably the tango. To succeed in Argentine business, understanding local values and practices is vital. These tips offer valuable insights.
Timeliness matters; punctuality is key for meetings, even though waiting is common. High-level decisions necessitate arranging meetings with top executives well in advance. Face-to-face interactions are paramount, while written or phone communication is seen as impersonal. Addressing individuals by professional titles, such as “Doctor,” is customary in formal situations, showing respect based on gender.
Meetings entail greetings and seating protocol, typically initiated with handshakes and eye contact. Informally, physical closeness while speaking signifies friendship. A kiss and hug are customary when meeting family or friends. Conversational small talk precedes business discussions. Directly delving into business is considered impolite. Sports and entertainment are safe topics, while sensitive subjects like politics or the Falklands (Islas Malvinas) War should be avoided. Relaxed demeanor, limited hand gestures, and subtle sales approaches work best. Dress code is formal for men and smart for women.
Though Spanish is official, it bears Italian influence. Proficiency in European Spanish benefits, as business is conducted mainly in Spanish. English is prevalent in major cities.
Work hours generally span 8-9 am to 5-6 pm, though traditional siestas vary by region. Urban business adheres to 8-5 pm hours. Business pace may be slower, and meetings could extend beyond planned time.
Argentinians value negotiation and discussion, often requiring multiple meetings for deal closure. Contracts are thorough and only finalized with signatures. Bureaucracy is demanding; local guidance is recommended.
Personal relationships matter, reflecting Argentine family-centric culture. Strong relationships expedite negotiations. Respect for elders and loyalty to individuals over companies are vital. Public criticism is frowned upon. While direct, Argentinians are tactful. Gifts are not expected until a close bond is established.
In a nation shaped by its diverse origins, understanding its culture is essential for successful business dealings.
Article written by
Marco Bertossi
Bertossi & Asociados
Rosario, Argentina.
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