Legal Framework for Investments in Argentina

Argentinas National Investment Development Agency

August 2009

Legal Framework

ProsperAr offers a one stop shop in Argentina for both domestic and foreign investors. The Agencys objective is to provide the technical assistance required to facilitate and increase the level of investment in Argentina. The Agency accordingly provides potential investors with personalized professional services at all stages of the investment process, from the initial project evaluation to the post-investment phase. The assistance provided includes comprehensive, trustworthy and up-to-date information to make the investment decisionmaking process easier. The Agencys experts help to overcome specific difficulties either directly or through contacts in the competent government bodies, while the Agency actively encourages associations between local and foreign businesses to enhance the benefits of investing in Argentina. This document provides the following information in relation to the services provided: 1. The legal framework for foreign investment in Argentina; equality of treatment with domestic investors. 2. The legal structures that companies may adopt. 3. General features of the Argentine taxation system. 4. Legal framework for the hire of personnel in Argentina. 5. Framework of norms for investment incentives.

Legal framework for foreign investment in argentina: equality of treatment with national investors
Law 21.382
Introduction
In the Argentine Republic, foreign investors and investments are amply protected by the law, supported by a package of national and international measures which place this country in pole position as an attractive destination for foreign investors and investment. The Argentine Constitution offers foreigners equal treatment as from its Preamble and recognizes that non-nationals enjoy the same rights as nationals in Section 20. Section. 20: Foreigners enjoy within the territory of the Nation all the civil rights of citizens; they may exercise their industry, trade and profession; own real property, buy and sell it; navigate the rivers and coasts; practice freely their religion; make wills and marry under the laws. They are not obliged to accept citizenship nor to pay extraordinary compulsory taxes. They may obtain naturalization papers residing two uninterrupted years in the Nation; but the authorities may shorten this term in favor of those so requesting it, alleging and proving services rendered to the Republic.

a) Law on Foreign Investment

The Foreign Investment Law1 defines the legal framework regulating foreign investment 2. This law covers the different ways in which foreign investors may invest capital in Argentina for the purposes of carrying out established activitiesin the industrial, mining, agricultural, trade, and financial sectors of the economy, whether directly in the area of services or in other areas related to the production and exchange of goods and serviceswithout prior approval. The Law states that such investors shall enjoy the same rights and be subject to the same obligations as defined for domestic investors by the Argentine Constitution and Laws. The legislation regulating foreign investment establishes certain definitions for this purpose. Foreign capital investment: All capital contributions issuing from foreign investors applied to activities of an economic nature undertaken in the country and/or the acquisition of shares in the capital of an existing domestic company, on behalf of foreign investors. Foreign investor: All individuals or legal entities domiciled outside national territory that make an investment of foreign capital and domestic companies of foreign capital, when these invest in domestic companies. Domestic company of foreign capital: Any company domiciled within the territory of the Argentine Republic where individuals or legal entities domiciled outside its borders directly or indirectly own over 49% of the capital or directly or indirectly have the number of votes required to control shareholder or partner meetings.
1. law # 21.82 2. text to be found in Annexe 1 of Decree 185/9 http://www.infoleg.gov.ar

Domestic company of domestic capital: All companies domiciled within the territory of the Argentine Republic where individuals or legal entities also domiciled in this country directly or indirectly own no less than 51% of the capital and directly or indirectly have the number of votes required to control shareholder or partner meetings.

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rights of foreign investors Foreign investors may remit abroad liquid profits arising as a return on their investment as well as repatriate their investment. They may avail themselves of any of the legal forms of incorporation foreseen by Argentine legislation. They may make use of domestic credits and loans with the same rights and under the same conditions as domestic companies of domestic capital. ways in which foreign investments can be effected Convertible foreign currency. Capital goods, spare parts and accessories. Capital or utilities in domestic currency belonging to foreign investors as and when this may meet the legal requirements for transfer abroad. Capitalization of foreign loans in foreign convertible currency. Intangible assets, according to specific legislation. Other forms of contributions contemplated in specific or promotional regimes. The Foreign Investment Law also provides for the treatment of provisional contributions and of the relationship between controlling and controlled companies. Provisional contributions (exception). Provisional foreign capital contributions made for the purposes of implementing lease contracts for goods, works or services or others, are not covered by this Law and shall be governed by the terms of the individual partnership agreements applicable according to the legal requirements given. Nonetheless, the owners of these contributions may opt to make their investment within the terms of the Law. the relationship between controlled and controlling companies. Legal agreements celebrated between a domestic company of foreign capital and the company directly or indirectly controlling it shall be considered to all effects as celebrated between independent parties as and when their stipulations and conditions are in line with common practices in the market by independent entities.

B) International negotiations related to investments

Argentina plays an active role in international negotiations concerning the environment for regional, bilateral and multilateral investment in order to improve the investment climate at local level. regional scope: Argentina has underwritten a series of regional economic agreements which offer foreign investors an outstanding platform from which to expand the scope of access to Latin American markets for their products. One of the most important of these agreements is the Treaty of Asuncin (Tratado de Asuncin) of March 26, 1991 which established the MERCOSUR. The Treaty is enshrined in the framework of the Latin American Integration Association (Asociacin Latinoamericana de Integracin - ALADI) as a Partial Scope Economic Complementation Agreement. MERCOSUR includes Argentina, Brazil, Paraguay, and Uruguay. Bolivia and Chile are Associate Members of the MERCOSUR.

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This process of regional economic integrations benefits and enhances foreign investments made in Argentina as they thus have an unbeatable access to these markets. Similar agreements have been signed with Colombia, Ecuador, Venezuela and Peru as well as Mexico. Outside the ALADI, Argentina as a Member State of the MERCOSUR has signed fixed trade preference agreements with the Republic of India and with South Africa, subsequently extended to include the Southern African Customs Union. It has also underwritten framework agreements with Egypt, Morocco, Israel, the Gulf Cooperation Council (Saudi Arabia, Bahrain, the UAE, Kuwait, Oman and Qatar) and Pakistan. Bilateral scope: Argentina has 54 Bilateral Investment Promotion and Protection Agreements with different countries which provide foreign investors and investment with ample protection. (See Annex I). multilateral scope: Argentina has been a member of the World Trade Organization (WTO) since it was created in 1995 and an observer of the Investment Committee of the OECD since 1996. This country is thus a member of the Multilateral Investment Guarantee Agency (MIGA), whose objective is to mitigate the risks of investment and provide advice and information on investment opportunities in emerging economies.

C) exceptions to the exchange control regime concerning the inflow of foreign currencies for the purposes of Foreign Direct Investment (FDI)
The inflow of foreign currencies for FDI in the Argentine Republic is exempt from the exchange control regime. The Central Bank of the Argentine Republic regulations exempts from its control those imports of foreign exchange to be used for: (i) contributions required for direct investments in the country, or (ii) the purchase of stock in domestic companies by direct investors. The following operations are therefore exempt from controls: 1. The inflows of funds from non-residents for the purpose of the purchase of real estate, under certain conditions. 2. Income arising from loans taken out with multilateral and bilateral credit organizations as well as official credit agencies. 3. Income arising from foreign financial loans within the non-financial private sector, aimed at investment in non-financial assets or training for micro-enterprises and/or improvements to be made in residences and family homes, inasmuch as such loans are incurred and repaid over a period of no less than two years, including capital and interest repayments. 4. All inflows of foreign currencies either aimed at, or originating in, the primary underwriting of stock certificates, bonds or debt papers issued by trust funds whose purpose is to develop infrastructure works in the energy sector and whose underlying assets are wholly or partially made up of the specific remits provided for by Law N 26.095, as long as these are paid off or covered wholly or partially over periods of no less than 365 consecutive days, irrespective of the method of payment.

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2. Legal structures that companies may adopt

Introduction
The main legal forms of business that foreign investors may establish when installing themselves in Argentina with any degree of permanence include setting up an overseas Branch, the acquisition of stock in an existing company or the creation of a new one.

a) overseas branches
A Branch is effectively the same company which opens an office in the country. It is not necessary to create a new legal entity. It should be noted that the Branch answers in terms of assets to the total value of the capital owned by companys Head Office (HO) and not to the value of the branch in Argentina as assigned by HO. The branches of foreign companies are required to register their presence. They may undertake all the activities pursued by HO, in the name of HO and through the person designated as its representative. The branch must be managed by a legal representative with administrative powers which may be limited according to circumstances. However, as said earlier, HO is responsible for all the Branchs liabilities. Its administrative authority should be sufficiently broad-based to allow for transactions with financial institutions and other local suppliers to be carried out efficiently. The branches are subject to on-going control on behalf of the stockholder control organization and must comply with the same requirements as incorporated business companies. Their accounting must be managed separately from HO and they must periodically present their financial statements to this entity. registering Branches For a Branch to operate legally, the following is required: 1. A certificate testifying to the length of time the company has been operational in the country of origin and that it is not in liquidation or involved in any legal process that implies a restriction on its goods and/or activities. If the legal system of the country where the company is registered does not make official provision for issuing this certificate, it may be replaced by a report signed to this effect by an attorney or notary originally from the country where this situation occurs. 2. Foreign documentation including: a) The partnership agreement or company statutes and any amendments. b) The resolution adopted by the registered body which resolved to create the branch, affiliate or permanent representation in the Argentine Republic. c) The date of the close of the companys financial year. d) Its registered office in the City of Buenos Aires, with the exact address (and the representative must have power of attorney for this purpose). e) The capital assigned to it, if this is the case. f) The designation of the representative, which must be an individual.

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3. Foreign documentation signed by one of companys executives (who must provide proof of said faculties before a public notary or official) stating that: a) There are no restrictions or prohibitions in the place where the company was incorporated which hinder or prevent it carrying out all of its activities, or its main activity / activities. b) It possesses, outside the Argentine Republic. One or more operational agencies, branches or representations, and/or Non-current fixed assets or exploitation rights for third-party assets of this nature, and/or Stock in other companies not subject to takeover bids, and/or The practice of transacting investment operations in stock markets as foreseen in its statutes. c) The individualization of the partners at the time the decision to apply for registration was taken. 4. Original proof of the publication of the edict, when applied to a stockholding company of limited liability or of a form unrecognized by Argentine law, including: a) Concerning the branch, affiliate or representation, its registered offices, capital assigned if relevant and the date of the close of its financial year. b) As regards the representative, his/her personal data, legal address, term of representation if relevant, limits to his/her authority, in each case if more than one representative is designated. c) As regards a foreign company, the data foreseen in Article 10 of Law 19.550 in relation to its statutes and amendments. (See 4. Publication of Edicts). 5. A document signed by the representative designated certified by public notary or personally ratified prior to registration in which said representative must: a) Provide personal data. b) Establish the registered offices if so authorized. c) Establish a fixed place of business within the radius of the City of Buenos Aires.

B) Creation of a new company or acquisition of shares in an existing one

The Law of Commercial Companies (LCC) contemplates a broad variety of corporate forms, amongst which the most widely used by foreign investors in Argentina are the incorporated business company (Sociedad Annima SA) and the limited liability company (Sociedad de Responsabilidad Limitada SRL). In these cases, unlike Branch offices, these kinds of companies are only answerable in principle for the capital of the company incorporated or in which stock is acquired. Unlike domestic companies, foreign undertakings which wish to set up a company or acquire stock in an existing one must previously be able to prove that they are legally incorporated in their countries of origin on the one hand, and register their statutes, amendments and other documentation authorizing them to operate, as well as the documentation relating to their legal representatives, in the appropriate Public Registry of Commerce.

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Incorporated Business Company (Sociedad Annima - SA):

This format establishes that the companys property belongs to the stockholders whose responsibilities are limited by the contributions they make. Its incorporation requires a minimum of two stockholders. The stock may or not be quoted on the Stock Exchange. In the case of Incorporated Business Companies, there is no limit on the number of stockholders in the company (limited liability companies may be partners in an incorporated business company). The operation of these companies is regulated by their statutes. Administration is the responsibility of a Board made up of one or more members, whether they are stockholders or not. The majority of those sitting on the Board must be resident in the country. However, there are no limits on the residency or nationality of the stockholders, although if these are foreign commercial companies they should be registered at the Public Registry of Commerce. The directors answer unanimously as one and without limits for the company, to the stockholders and third parties for poor job performance, breaking the law, statutes or regulations, and any other damages arising from fraud, the abuse of responsibilities or gross negligence. Incorporated Business Companies must be registered via public deed. In the City of Buenos Aires they must be registered with the General Inspection of Justice (Inspeccin General de Justicia - IGJ) and require a minimum capital of AR$ 12.000 (twelve thousand Argentine pesos). In Argentina incorporated business companies are subject to internal and external tax audits. External tax audits are undertaken by the Public Registry of Commerce corresponding to the jurisdiction. There are also special regulatory organizations for certain activities. For example, companies which quote on the stock exchange are audited by the National Securities Commission (Comisin Nacional de Valores - CNV), financial entities by the Central Bank of the Argentine Republic (Banco Central de la Repblica Argentina - BCRA); insurance companies by the Insurance Superintendent (Superintendencia de Seguros - SSN). Internal tax audits are usually the responsibility of one or more trustees nominated at the stockholders meeting. This is optional for those companies not permanently under the supervision of a government entity. Furthermore, the Law contemplates the control of the supervisory board, a broad-based entity, established by the statutes. It should be pointed out that in practice this alternative form of supervision is not frequent.

Limited Liability Company (LLC):

LLCs share a number of features with the incorporated business companies except for the following conditions: The number of partners may not exceed 50 persons; Incorporated Business Companies may not be partners; They may not quote on the Stock Exchange; A change in one of the partners requires the company statutes to be modified; The procedures for setting up the company are simpler; and, The statutes are more flexible. As with the Incorporated Business Companies, the partners responsibilities are limited to the amount of stock they underwrite or acquire, but in this case, the partners must provide unlimited and mutuallybinding guarantees of their contributions. Partners may own more than one share. Although the Law

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places no restrictions on transfers, the partnership agreement may do so. The task of administering and representing the company corresponds to one or more managers or partners or others. The managers are held responsible at personal or mutually-binding level, according to the way management is organized and the rules governing its working as established in the partnership agreement. LLCs may be established by means of public or private instruments. They must register with the General Inspectorate of Justice (IGJ). There are no minimum capital requirements, however this should be related to the companys stated aims. Common issues regarding the registration of Companies in argentina The registration of commercial companies in Argentina is carried out at the Public Registry of Commerce corresponding to their fixed business address. In the case of the City of Buenos Aires, the organization and activities of the Public Registry of Commerce are the responsibility of the IGJ. The process for establishing a company at the IGJ takes approximately 30 (thirty) days and involves the following requirements: 1. Application for Reservation of name or denomination (Reserva de nombre o denominacin) This involves filling in form # 3, which includes three proposals, available at the IGJ and returning the original and one copy to the Sector called Reservation of names (Reserva de nombres). 2. Presentation form Form # 1. Establishment and amendments: a. The partnership agreements or statutes with certified copies. b. Legal Opinion on professional pre-qualifications. 3. Payment of Corporate Establishment Tax or Retributive Tax, as required If an Incorporated Business Company is to be established, a one-off payment of the corporate establishment tax must be made at the Banco de la Nacin Argentina. If a Limited Liability Company is to be established, a one-off payment of the retributive tax must be made at the Banco de la Nacin Argentina. 4. Publication of Edict Article 10 section A of the Law of Commercial Companies establishes that limited liability companies and stockholder companies must publish an advertisement in the official journal for legal publications. The advertisement must cover certain information, including: Name, age, marital status, nationality, profession, address and identity document number of each of the partners; Date when the documents establishing the company were drawn up; The name or denomination of the company; Company address; Company aims; Duration; Stockholders equity Make-up of the administration and audit departments, names of their members and amount of time in these positions where relevant;

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 Details concerning legal representation; Date of close of financial year. 5. Initial deposit An initial deposit of 25% of the liquid capital contributed must be made at the Banco de la Nacin Argentina. This may be done at the time of applying for registration. 6. Foreign companies establishing a Company in Argentina Foreign companies wishing to set up a company in the Argentine Republic must, in addition to the points mentioned above: Prove that they have been established in accordance with the laws in force in their countries of origin before the judge of their respective Public Registry of Commerce. Register the companys original partnership agreement, amendments and any other documentation concerning its authorization, as well as that relating to its legal representatives at the Argentine Public Registry of Commerce (if this is a stockholders company it should also be registered at the Stockholder Company Register). State whether there are any prohibitions or legal restrictions on the companys activities, main activity or activities in its country of origin. This information must be given in the partnership agreement or statutes of the company or subsequent amendments, if relevant. Prove that as of the date of the application for registration, the company complies with at least one of the following conditions outside the Argentine Republic: Existence of one or more branches or permanent representatives, accompanied to this effect by documentation certifying the validity of these, issued by the competent administrative or legal bodies from the location where they are based. Ownership of stock in other companies which comes under the heading of non-current assets according to the definitions given in accounting standards in general use. Ownership of fixed assets in the place of origin, whose existence and value must be verified by the definitions given in accounting standards in general use. The two requirements mentioned immediately above must be supported by the financial statements of the company and/or certification documentation signed by one of the companys executives, taken from the accounting entries transcribed into the companys books. Provisions related to documentation originating abroad: Documentation originating abroad must be presented according to the requirements established by the legislation in force in its country of origin, duly authenticated, stamped or legalized by the Ministry of Foreign Relations, International Trade and Worship of the Argentine Republic as required, and if necessary accompanied by a version translated into Spanish by a sworn translator whose signature must be legalized by the relevant professional association for this purpose. notary protocols Documentation originating abroad which must be registered may also be presented under a notary protocol signed before a registered notary of the Argentine Republic with its corresponding translation into Spanish.

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3. general overview of the argentine tax system

Introduction:
In Argentina, tax revenue is collected by the Argentine Government, the Provinces and municipal authorities. The tax system is structured on the basis of dues levied on income, wealth and consumption. At a national level, the Federal Administration of Public Income (Administracin Federal de Ingresos Pblicos - AFIP), the independent entity which answers to the Ministry of Economy and Public Finance, is responsible for the taxation of income, wealth and consumption. The main taxes levied at national level include: Income Tax, Value Added Tax, Presumed Minimum Income Tax, Internal Taxation, Personal Estate Tax, and Taxes on Debits and Credits in Bank Accounts and Other Operations. In the provincial ambit, taxation is collected and administered by the provincial Duties Departments, entities subordinate to the respective Ministries of Economy in the provinces. The main provincial taxes are Income Tax, Stamp Duties and Real Estate Tax. Finally, at municipal level, revenue arises from the collection of a number of taxes and duties.

a) national taxation
Income tax: All income, including capital gains, is subject to this tax. Companies resident in Argentina pay taxes on their global income, although they may submit as payment on account of these taxes those amounts effectively paid as similar taxes on their activities abroad up to the limits established of the increase in tax obligations arising from the incorporation of the earnings gained abroad. Argentines and nationalized foreigners, foreigners with permanent residence in the Argentine Republic or those who have legally resided in the country for twelve months are considered residents, as are the following; the undivided estate of taxpayers who fulfill the condition of Argentine residents on the date of decease; incorporated business companies and other business forms (one-person companies, civil associations, foundations, etc.) established in the country. Branches established in the Argentine Republic of companies established abroad are considered resident entities and thus subject to taxation. The tax applicable to resident companies and branches set up in this country belonging to non-resident companies is 35% of total earnings. Non-resident companies that do not own branches or any other permanent establishments in the Argentine Republic are only subject to taxes on income earned in Argentina. The tax is withheld by a payment agent in Argentina according to a taxation scale dependent on the kind of income. These taxes arise from the application of a 35% levy on presumed earnings as established in the Law on Income Tax. Double Taxation Treaties: The Argentine Republic has signed Broad Agreements with different countries in order to avoid double taxation. The agreements seek to avoid companies or individuals being taxed twice with regard to income, capital and/or wealth taxation. (See Annex II). value added tax (vat): VAT is a tax applied on the price of the sales of goods and services at each stage of the commercialization process, taking as payment on account the amounts erogated by the payment of this tax during earlier stages in the process.

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General VAT is 21% while the differential VAT rate is 10.5%, half the general rate. The latter is applied to different goods and services: the sale of capital goods, transport (except for international travel, the sale of newspapers, magazines, brochures and periodicals, prepaid health coverage and interests on foreign and domestic bank loans. Imports are also subject to this tax at the same rates as domestic goods or services. Exports are not taxable and exporters may thus apply for VAT refunds on their purchases. The provision of certain services such as electricity, natural gas and water to properties not for residential use is subject to greater taxes. Payments must be made monthly, unlike fiscal credits arising from purchases and fiscal debt arising from sales operations. tax on Presumed minimum Income: This tax is applicable to all assets (located both in the Argentine Republic and abroad) of Argentine companies at an annual rate of 1%. It is also applied to goods located in Argentina which are the property of permanently-established foreign individuals or entities. The amount to be paid as Income Tax is considered as payment on account for this particular tax. If the Income Tax to be paid is greater than the Tax on Presumed Minimum Income, only the former is to be paid. If, however, the Tax on Presumed Minimum Income is greater than the Income Tax established, the excess may be used for a maximum period of 10 (ten) years to compensate for the potential overcharge of Income Tax defined concerning the allowance mentioned in the first instance. The calculation of tax credits for parallel taxes paid abroad for goods located outside Argentine territory may be admitted. Similarly, advances received on account of the taxes to be levied in each tax period should be recorded. tax on Personal estate: This is a wealth tax as it is applied to personal goods owned up to December 31 each year, and is applicable to both individuals and undivided estates. Individuals residing in the country are obliged to pay this tax on an annual basis, consisting of a sum equivalent to 0.5% of their personal estate with a value of between AR$ 305,000 and AR$ 750,000. Amounts over this figure and up to AR$ 2,000,000, are taxed at 0.75%; from AR$ 2,000,000 to AR$ 5,000,000, at 1%, and values over these figures are taxed at 1.25%. It should be noted that subjects established in Argentina are liable for taxes on goods located both in the Argentine Republic and abroad. Individuals domiciled abroad are only subject to taxes on goods located in the Argentine Republic. The regime applied is that of liable proxy subject to a tax of 1.25%. Nonetheless, as from the 2002 tax year there is a presumption in force which does not admit evidence to the contrary, according to which, individuals domiciled abroad or undivided estates established there may indirectly own stock and/or shares in the capital of Argentine companies whose owners are companies or any other kind of legally valid entity, companies, stable establishments, appropriation of wealth or exploitations, domiciled or established abroad. Likewise, as from then, Argentine companies are obliged to calculate and pay the taxes on the stock and/or shares in the capital of Argentine companies as liable proxy, calculating the rate on the basis of a 0.50% charge on the value assigned to the stock/shares (net assets of the Argentine company as of December 31 of each year, excepting certain circumstances).

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Internal taxes: These are applied to the consumption of certain products at different rates and according to different payment and declaration regimes. In general, these taxes are applied to manufacturers or importers at the moment of selling their product. tax on Debits and Credits in Bank Current accounts: This tax is applied to credits and debits incurred in the bank accounts of the company account holder at a rate of 0.6% for debits and 0.6% for credits. All movements or transfers of money will be taxed at 1.2% when carried out using payment systems which replace the use of banking current accounts. It should be noted that there are certain differential rates and exemptions which may be applied to specific operations. tariffs on the Import of goods: Import duties are levied at between 0 to 35%, except in specific cases where minimum thresholds are applied or the goods are from a category which receives special tax treatment. Generally, goods from ALADI members are subject to preferences on a percentage basis. As far as MERCOSUR is concerned, import duties for inter-zone trade have virtually been eliminated. At the same time, a common external tariff has been established for goods sourced and originating outside the zone. Other taxes that importers must pay are: Statistics Duty (0.5% on cost, insurance and freight CIF up to USD 1,750) and in some cases, Destination Confirmation Tax (2% of CIF). Imports are also subject to VAT (21% or 10.5% in certain cases) and Income Tax (usually 3% in most cases.

B) Provincial taxation
Income tax: All Argentine jurisdictions (provinces and the City of Buenos Aires) apply this tax to the gross income of any company carrying out a commercial, industrial, agricultural, financial or professional activity. The tax is levied on each commercial transaction and no fiscal credits are awarded for taxes paid during preceding stages. The taxes levied differ according to the kind of activity and the Law in force in each jurisdiction varies from 1.5% to 4%. (Primary and industrial activities in general are exempt). The taxes are paid over a calendar year with payments made on a monthly basis or every two months, depending on the jurisdiction. stamp Duties: These are provincial taxes levied in each province generally applicable to the transactions, partnership agreements and operations of any value in the form of public or private instruments. In general, the tax rate charged is 1% although it may vary according to the deeds and legislation in force in the jurisdiction where the afore-mentioned deeds apply. In the City of Buenos Aires, this tax is only applied to the transfer of ownership for property and lease contracts or the sublet of properties in which commercial activities are carried out. The rate applicable to the transfer of property is 2.5% and to the lease or sublet of the same is 0.5%. Property tax: Properties in every jurisdiction are liable for annual taxes which are calculated by applying the rates fixed by the Law on the taxation of the fiscal valuation of land free of improvements, and of improvements.

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Property Tax is a realty tax applied to the value of the land and buildings without taking into account the personal situation of the taxpayer. The amount is set by the application body and is calculated according to the tax laws of each fiscal period which establish the valuation and rate scales to be applied on taxable income according to the system foreseen for each kind of property.

C) municipal taxes
retributive services taxes: Municipal tax departments charge rates for providing industrial health and safety and other services on the basis of income or other fixed parameters such as numbers of personnel, driving force capacity/horse power, etc.

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4. Legal framework for the hire of personnel in argentina

Introduction:
Employment contracts may take different forms. However, the standard rule is the non-fixed term employment contract which aims to ensure the continuity and permanence of the working relationship.

Forms of hire:
Employment contracts are non-fixed term, unless there is a specific provision to the contrary. The Law establishes a trial period of three months which may be extended to six under a collective agreement. During this period the employee may be fired without receiving any form of indemnity. Domestic legislation foresees the possibility of part-time employment contracts. Working hours may not exceed 2/3 of a normal working day and the duration of the contract must be fixed by a collective work agreement. A part-time regime does not allow for over-time.

annual Bonus salary:

The Law provides that full-time workers and employees may take home an extra salary as a bonus (aguinaldo) paid in two six-monthly quotas in June and December. Each quota is equal to 50% of the highest monthly salary paid during the previous six-monthly period.

vacations:
The duration of the vacations depends on the length of the working relationship to-date; if this exceeds six months and is less than five years service it is 14 days; 21 days if the period served is five to ten years; 28 days if this is 10 to 20 years, and 35 days if the employees period of service is 20 years or more. If the employee has been in service for less than six months, he/she may be given one day off for each twenty days worked. If the contract expires without the employee having taken his/her vacation, he/she must receive financial compensation proportionate to the period worked, as and when this is at least three months.

redundancy:
Employment contracts must be terminated with prior notice. Prior notice shall be given by the employee 15 days prior to the termination of the contract, while the employer must give 15 days warning when the employee is in the trial period, one month when the employee has been employed for a period not exceeding five years and two months when the period exceeds this. Redundancy indemnity is equivalent to a twelfth part of the highest basic monthly salary paid to the employee during the last year o during the time worked if this period is less, for each month of work or fraction greater than 10 days. The highest remuneration which is taken as the baseline may not be greater than three times the monthly average contemplated in the collective agreement applicable to the employee in question.

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The minimum indemnity may not be less than two twelfths of the highest basic monthly remuneration paid the employee during the last year of service. When the employer fires the employee because the latter has committed a work-related offense (of sufficient gravity) which hinders the continuity of the relationship, the latter is not entitled to receive the indemnity provided for by labor legislation.

social security contributions:

Companies make employer contributions to cover the social security services of their employees. These contributions cover family allowances, medical services, pension plans and unemployment funds. The rates are 27% of the gross salary paid for employers whose main activity is the provision and lease of services, and 23% for other employers. In order to foster new job creation in Small and Medium-Sized Enterprises, those employers who increase the number of persons in their full-time non-fixed term employment are eligible for a reduction in the social security contribution rates. This discount applies to one-third of the contributions made. At the same time, all the companies based outside the metropolitan area whatever their size may offset against VAT a percentage of the amounts paid as employer contributions.

working hours:
Normal working hours are 8 hours a day, or 48 hours a week. The working day may be extended to include hours worked over-time which should be paid at an additional 50% of the normal hourly rate. The hourly rate on Saturdays after 1 pm, Sundays and national holidays is double the normal rate. Night work is permitted but may not exceed the daily period of 7 hours between 9 pm and 7 am. There are twelve national holidays in the year Month January March March/April April May May June July August Octuber December December Date 1 24 * 2** 1 25 20*** 9 17*** 12** 8 25 Reason for holiday New Years Day National Day of Memory for Truth and Justice Holy Week Good Friday Day of the War Veteran and those Fallen in the South Atlantic Conflict (Guerra de Malvinas) Labor Day Anniversary of the First National Government National Flag Day National Independence Day Anniversary of the death of General Jos de San Martn Columbus Day Feast of the Immaculate Conception Christmas

* Variable date. ** If this holiday falls on a Tuesday or a Wednesday it is passed to the preceding Monday, and if it coincides with a Thursday or Friday, it is passed to the following Monday. *** The holiday is celebrated on the third Monday of the month.

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minimum Living wage:

In Argentina, the Minimum Living Wage is set by the National Board for Employment, Productivity and Wages, made up of representatives from the trade unions, employers associations and the Executive Power. The resolutions passed by this body require a majority vote of two-thirds of its members. Currently, the minimum living monthly wage stands at AR$ 1,400 (USD 364).

The main laws and regulations in force which regulate labor and welfare issues in Argentina are the following: Employment Contract Law N 20.744; Law of Union Associations N 23.551 and Decree # 467/88; Collective Working Agreements N 14.250 and 25.250; National Employment Law N 24.013; Labor Reform Regime Laws N 25.013 and 25.877; Occupational Hazard Law N 24.557; Integrated Retirement and Pension Systems Law N 24.241; Family Allowance Regime Law N 24.714; and National Health Insurance and Coverage System N 23.660 and 23.661.

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5. Framework of norms for investment incentives

Argentine legislation includes norms designed to encourage development in specific areas of the economy. This chapter covers some of the incentives in force at the time which may be taken into account when making decisions.3 1. Incentives for investment in capital goods and infrastructure 1.1. Promotion of investments in capital assets and infrastructure works 1.2. Reduction in the import allowances of capital assets 1.3. Reduction in VAT 1.4. Incentives for the production of capital goods, IT, telecoms and agriculture machinery 1.5. Import of goods to be integrated into large-scale investment projects 1.6. Used production lines 1.7. Temporary import of capital goods 2. sectoral incentives 2.1. Automotive Promotion Regime 2.2. Software Industry Promotion Regime 2.3. Promotion of the Development and Production of Modern Biotechnology+ 2.4. Biofuels Promotion Regime 2.5. Mining Promotion Regime 2.6. Forestry Regime 2.7. Program of Incentives for the Exploration and Exploitation of Hydrocarbons 2.8. Public infrastructure works 3. Incentives for re-location: provincial regimes and free zones 3.1. Provincial regimes 3.2. Free zones 4. Incentives for technological development and innovation 4.1. Argentine Technological Fund (FONTAR) 4.2. Trust Fund for the promotion of the Software Industry (FONSOFT) 4.3. Fund for Scientific and Technological Research (FONCYT) 4.4. Federal Board of Science and Technology (COFECYT) 4.5. Promotion of Technological Innovation 5. employment incentives
. For more information see the report entitled Investment Incentives, prosperAr, 2009. (http://www.prosperar.gov.ar)

5.1. Integrated plan for the Promotion of Employment: More and Better Jobs 5.2. Training and Skills Certification Program 5.3. Tax credits for SME training 5.4. Tax credit regime for technical education courses

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6. Financing programs 6.1. Credit lines from the Banco de la Nacin Argentina (BNA) 6.2. Credit lines from the Banco de Inversin y Comercio Exterior (BICE) 6.3. Credit lines from the Consejo Federal de Inversiones (CFI) 6.4. Subsidized rates for loans for Micro-SMEs 6.5. National Development Fund for Micro-SMEs (FONAPyME) 7. export promotion 7.1. Export refunds 7.2. Draw Back 7.3. Temporary imports for industrial improvements 7.4. Export of turn-key factory installations 7.5. Regime of in-factory Customs 7.6. Regime of in-house Customs 7.7. Refunds on exports from ports in Patagonia 7.8. Subsecretariat of SMEs and Regional Development 7.9. Export.Ar Foundation

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annex I
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. Algeria (2000) Armenia (1994) Australia (1992) Austria (1994) Bolivia (1995) Bulgaria (1994) Canada (1992) China (1994) Chile (1991) Costa Rica (1999) Croatia (1995) Cuba (1997) Denmark (1994) Ecuador (1995) Egypt (1993) El Salvador (1998) Finland (1995) France (1992) Germany (1992) Guatemala (2000) Hungary (1994) Indonesia (1997) India (1999) Israel (1997) Italy (1992) Jamaica (1995) Lithuania (1998) 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. Luxembourg (1992) Malaysia (1995) Mexico (1998) Morocco (1997) Nicaragua (2000) Panama (1998) Peru (1996) Philippines(1999) Portugal (1995) Czech Republic (1998) Rumania (1995) Russia (2000) South Africa (2000) South Korea (1996) Spain (1992) Sweden (1992) Switzerland (1992) Thailand(2000) The Netherlands (1994) Tunisia (1994) Turkey(1994) Ucrania (1996) The United Kingdom (1992) The United States (1992) Venezuela (1995) Vietnam (1997)

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anexo II
Country Protocol AUSTRALIA AUSTRIA BELGIUM BOLIVIA BRAZIL CANADA CHILE Protocol DENMARK FINLAND FRANCE Protocol GERMANY ITALY Protocol NORWAY RUSSIA SPAIN SWEDEN SWITZERLAND Protocol of Amendments and Additions.THE NETHERLANDS THE UNITED KINGDOM DATE OF AGREEMENT 09/16/1996 08/27/1999 09/13/1979 06/12/1996 10/30/1976 05/17/1980 04/29/1993 11/13/1976 02/23/2003 12/12/1995 12/13/1994 04/04/1979 08/15/2001 07/13/1978 11/15/1979 12/03/1997 10/08/1997 10/10/2001 07/21/1992 03/05/1997 04/23/1997 11/23/2000 12/27/1996 01/03/1996 LAW N 25.332 B.O. 11/14/00 25.238 B.O. 12/31/99 22.589 B.O. 05/20/82 24.850 B.O. 07/22/97 21.780 B.O. 04/25/78 22.675 B.O. 11/17/82 24.398 B.O. 12/13/94 23.228 B.O. 10/01/85 26.232 B.O. 02/26/07 24.838 B.O. 24/07/97 24.654 B.O. 07/10/96 22.357 B.O. 12/30/80 26.276 B.O.08/13/07 22.025 B.O. 07/23/79 22.747 B.O. 02/24/83 25.396 B.O. 01/15/01 25.461 B.O. 09/13/01 26.185 B.O. 01/03/07 24.258 B.O. 11/19/93 24.795 B.O. 04/14/97 --------24.933 B.O. 01/15/98 24.727 B.O. 12/04/96

* retroactive provisional application : 1/12/2002.-

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annex III Useful information:

1. Legal framework for foreign investment in argentina: equality of treatment with national investors: Law 21.382 Decree 1853/93: www.infoleg.gov.ar http://www.infoleg.gov.ar/infolegInternet/anexos/55000-59999/56254/texact.htm

2. Legal structures that companies may adopt: Inspeccin General de Justicia (IGJ) Av. Paseo Coln 285 Ciudad Autnoma de Buenos Aires Tel. 0800-333-3445 www.jus.gov.ar/registros/IGJ/

3. general overview of the argentine tax system: Administracin Federal de Ingresos Pblicos (AFIP) Hiplito Irigoyen 370 Ciudad Autnoma de Buenos Aires Tel. 0810-999-2347 www.afip.gov.ar

4. Legal framework for the hire of personnel in argentina : Ministerio de Trabajo, Empleo y Seguridad Social Av. Leandro N. Alem 650 Ciudad Autnoma de Buenos Aires Tel. (5411) 4310-6000 www.trabajo.gov.ar

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For more information:

www.prosperar.gov.ar info@prosperar.gov.ar +54-11-4328-9510