Benefits and problems of registering a company in Argentina in 2024

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• Benefits and problems

  Benefits of Argentina company registration

  

  • Costs for conducting business in Argentina are low because:
    • Average monthly wages for skilled labor in Argentina are a mere US$1,300 and for unskilled labor US$300;
    • The average cost of electricity in Argentina for industrial users is US¢4 per kWh, cheapest in Latin America;
    • Argentina has the 3^rd lowest consumer price index in Latin America. Consequently, companies will find it cost-worthy to operate in Argentina;
    • Average monthly office space rentals in Argentina are low at US$1.5 per square foot;
    • Average monthly warehouse rental is a mere US$0.50 per square foot;
    • The paid up share capital of a Argentina LLC is US$300 and of a Stock corporation is US$3,000.
  • Argentina resident companies enjoy tax benefits including:
    • Argentina has released a ‘white list’ of countries that Argentina considers “co-operative” and has signed Double Taxation Treaties, Bilateral Investment Agreements or Tax Information Exchange Agreements with. These countries are i) not subjected to transfer pricing requirements and ii) benefit from reduced withholding taxes and customs duties;
    • Foreign companies involved in mining, forestry and tourism benefit from i) no increase in corporate taxes till 2019 ii) 50% Value Added Tax reduction iii) availability of 70% untapped natural resources;
    • Companies dealing in capital goods and investment projects enjoy complete VAT exemption;
    • Dividends from one Argentina resident company to another are completely tax-exempt;
    • At the state level, resident companies receive benefits including 100% exemption from i) turnover tax ii) real estate tax and iii) stamp tax;
    • IT companies benefit from i) extra zone (outside MERCOSUR) imports duty exemption for hardware imports ii) income tax reduction for R&D iii) VAT credit;
    • Companies get a 50% reduction on employers’ social security contributions in the first year and 25% in the second year of employment.
  • Quick solution:
    • Company registration in Argentina takes 12 weeks. If our Client needs to start a business in less than three weeks, Healy Consultants will be please to provide our Client with a quick and effective solution. Healy Consultants company registration specialists will assist our Client with finding shelf company services in Argentina. Our Client will own an Argentina company in one week.
  • Argentina is the 2^nd largest country in South America and enjoys several benefits for its extensive reserve of natural resources:
    • It has vast stretches of agricultural land amounting to 1,487,000 sq km (as per 2016). This is the main reason the Argentine economy has been highly dependent on agriculture;
    • Argentina has rich reserves of minerals, the most important ones include lead, zinc, tin, copper, iron ore, manganese, petroleum, uranium and lithium;
    • Argentina is the 4^th largest exporter of biofuels in the world;
    • Argentina has been ranked 33^rd in the world for its oil reserves. The nation has the 33^rd largest national reserves of natural gas, of around 379 billion ccu.

  Problems with Argentina company registration

  • Registration of an Argentina business is not easy because:
    • The board of directors for all registered Argentinian companies must be comprised of majority Argentinian residents. Healy Consultants will offer our Clients nominee resident director services at US$8,400 per annum;
    • An emergency fund worth 5% of annual profits has to be maintained by companies till it reaches 20% of their capital.
  • Argentina is a high tax country because i) corporate tax is 35% ii) VAT rate for energy, water, and communications is 27% iii) a 1% assets tax iv) up to 35% withholding taxes v) companies pay social security of up to 27%. Also, profits derived from sale of Argentina company shares are subject to 15% tax;
  • Argentina business is primarily conducted in pesos. It is difficult to repatriate profits to a parent company because there are foreign exchange controls including:
    • Argentina banks impose a monthly limit on online foreign currency purchases. This limit is equal to 20% of ones earnings;
    • Prohibition on acquiring foreign currency for saving fund purposes.
  • Argentina ranks 82^nd out of 128 countries according to the International Property Rights Protection Index;
  • Our Clients running a business in Argentina will often have to face i) employees’ requests for double digit wage increases and ii) higher prices for products bought from suppliers. Argentina indeed suffers an inflation rate of 34% in 2019;
  • Dividends and capital gains received by foreign entrepreneurs from their Argentinian business will dwindle in the coming months. The Argentinian peso has already lost 22% of its value against the US$ since January and most analysts expect another peso devaluation before the end of the year.
  • Argentina has been poorly ranked at the 83^rd position (out of 141 countries) in the Global Competitiveness Index 2019, mainly due to its i) poor macroeconomic environment caused by high inflation rates, high taxes and unstable policies and ii) inefficient government bureaucracy largely due to widespread corruption.

• Best uses for a Argentina company

  1. Argentina is an excellent place to register a new manufacturing business because:
     • Registering a company in Argentina’s 10 Free Trade Zones allows companies 100% exemption from i) custom duties and ii) Value Added Tax;
     • Argentina has Latin America’s second best workforce with i) 98% literacy rate ii) 70% population with English fluency and iii) 65% computer literacy;
     • MERCOSUR membership (union of Latin American countries) allows Argentina resident companies i) tariff-free exports into Latin America ii) access to a regional market of 275 million people iii) absence of withholding tax on foreign payments;
     • Argentina boasts a well-developed distribution center facilitating the mobilization of goods because of its 35,000 km of train network, 21 international airports and 21 seaports;
     • Argentina Corporate law allows 100% foreign ownership. Furthermore foreign companies have access to i) all economic sectors ii) all incentive schemes and iii) loans and credits for businesses;
     • Argentina companies are allowed to carry forward their net losses for five years;
     • Average monthly industrial space rental is a mere US$0.50 per square foot.