New Law regulating Entrepreneurs
On April 12, 2017, the Executive published Decree Law No. 252/2017 on the Official Gazette by which Law 27,349 was enacted (the “Entrepreneurs´ Law” or the “Law”). This Law introduces mechanisms that simplify the process of creation and development of enterprises, as well as tax benefits and the creation of funds for their financing.
Nowadays, the process for the creation of an enterprise lasts between 45 and 60 days in addition to the related high costs. In this sense, the Entrepreneurs´ Law facilitates the opening of small enterprises introducing a new legal concept: the “Simplified Joint-Stock Company”. So, the enterprise may be created via Internet in 24 hours. This includes the immediate opening of a simplified bank account and the creation of a Tax Identification Code (CUIT) issued by the Argentine Tax Authorities (AFIP).
Moreover, the Entrepreneurs´ Law establishes that these companies may be composed of one or more members and the companies´ minimum amount of capital must be two minimum living wages. This law also provides for the digitalization of signatures, corporate books and powers of attorney.
It is worth mentioning that the Government will give 0% loans for entrepreneurs who are undertaking productive projects. It is expected that this year the Government allocate 380 million Argentine pesos in this area.
Investors who decide to support Argentine ideas may have a 75-to-85% discount on their Income Tax from their capital contributions – taking into account the location – with a limit of 10% on his annual income.
In addition, this law introduces a Registry of Entities that make capital contributions to New Businesses and a Trust Fund for the Development of New Businesses (FONDCE) in order for the Government to invest together with the private sector for the first time. The FONDCE will be composed of 10 funds, 40% of which will represent public investment.
Furthermore, the Government will appoint 13 business accelerators to encourage entrepreneurs, 10 of which will be in charge of technological and social businesses, and the rest of them will be in charge of scientific ones. Said accelerators will be granted licenses for 4 years and capital contributions will be made to them for operating expenses and for the investment in Argentine entrepreneurial projects.
The Entrepreneurs´ Law also regulates the mechanisms of crowdfunding by which capital contributions can be made for certain projects through Internet. It should be noted that these mechanisms will be supervised by the Argentine Securities and Exchange Commission.
This new law aims at facilitating the creation, promotion and growth of small enterprises. According to the Government´s opinion, the purpose of this incentive is to foster the creation of 300 thousand new enterprises. It is worth mentioning that the creation of this kind of business entities will not operate automatically, in fact, time is needed for its regulation and implementation. In this sense, the law will be implemented in Buenos Aires in early June, and then it will be gradually expanded throughout the whole country.