Attitude toward Foreign Direct Investment
A top priority for the Macri government is attracting foreign direct investment (FDI) inflows to improve the nation’s productive capacity, increase employment, and restore economic growth. Immediately upon entering office on December 10, 2015, the Macri administration began to correct macroeconomic imbalances and reduce market distortions, such as reducing trade restrictions, lifting capital controls, re-unifying the exchange rate, and revising economic reporting data.
President Macri sought negotiations with Argentina’s bond creditors to resolve the country’s outstanding debt stemming from its 2001 financial crisis and subsequent sovereign default. The government and its creditors reached preliminary deals with creditors that the Argentine Congress approved in March 2016 – completing the requisites for a U.S. court to lift an injunction against Argentina and paving the way for Argentina to re-enter global capital markets. In April 2016, the government issued $16 billion in bonds in international markets. A portion was used to pay creditors and the rest went to bolstering Central Bank reserves. This was the highest debt emission in the history of Argentina. The demand for the bond was oversubscribed with investors placing orders for nearly $70 billion, showing the market’s great interest in the country.
The Macri administration has reinvigorated relations with key trading partners, such as the United States and European Union. Within his first months in office, the Macri administration signed numerous bilateral commercial, economic, and investment cooperation agreements, including with France and Italy. It also revived bilateral trade talks with Brazil, which lapsed in 2012.
In March 2016, President Obama became the first sitting U.S. president to make a bilateral visit to Argentina in 19 years. During the visit, the United States and Argentina signed a Trade and Investment Framework Agreement to create a forum for engaging on a broad range of bilateral economic issues, such as market access, intellectual property rights protection, and cooperation on shared objectives in the World Trade Organization and other multilateral fora. Argentina and the United States also signed a Memorandum of Intent to establish a Commercial Dialogue that will facilitate public-private ties and communication on trade and investment issues.
Argentina is actively engaged with the United States in resolving a few trade disputes, including a World Trade Organization case stemming from restrictive import policies introduced by the last administration. Argentina has also voiced its intention to ratify the World Trade Organization’s Trade Facilitation Agreement and deepen its engagement with the Organization for Economic Cooperation and Development (OECD). The government renewed discussions with the International Monetary Fund for an Article IV review during the second half of 2016, the first formal consultations in a decade.
The Argentine government recently passed new renewable energy regulations and revamped its hydrocarbons framework with the aim of attracting new investments to develop Argentina’s energy resources. A special committee under the new Ministry of Communications is drafting a new communications law with the goal of increasing transparency and opening the market to competition. Official government statements indicate that the government will continue pursuing a path of reform to improve the investment climate and increase business confidence in order to attract investment inflows.
Foreign and domestic investors generally compete under the same conditions in Argentina.
Other Investment Policy Reviews
Argentina was last subject to an investment policy review by the Organization of Economic Cooperation and Development (OECD) in 1997 and by the World Trade Organization (WTO) in 2013. United Nations Conference on Trade and Development (UNCTAD) has not done an investment policy review of Argentina.
Laws/Regulations on Foreign Direct Investment
According to the Foreign Investment Act, a Presidential decree that governs foreign investment in Argentina, foreign investors may invest in Argentina without prior governmental approval, under the same conditions as investors domiciled within the country. Investors are free to enter into mergers, acquisitions, green-field investments, or joint ventures. Foreign firms may also participate in publicly-financed research and development programs on a national treatment basis. Incoming foreign currency destined for investment must be registered with the Central Bank of Argentina (www.bcra.gov.ar). There is no official executive or other interference in the judicial system that could affect foreign investors.
Further information about Argentina’s investment policies can be found at the following websites:
Business Registration
Foreign investors seeking to set up business operations in Argentina follow the same procedures as domestic entities. To open a local branch of a foreign company in Argentina, the parent company must be legally registered in Argentina. Setting up a limited liability company (LLC) takes about 18 procedures and an estimated 50 days. There are no restrictions on full foreign equity ownership. Argentine law requires at least two equity holders, with the minority equity holder maintaining at least a five-percent interest.
A company must register its name with the Office of Corporations (IGJ or Inspección General de Justicia). The IGJ provides online services for name verification at https://www2.jus.gov.ar/igj-homonimia/Principal.aspx. The company must certify its founding partners’ signatures before a public notary. The company is not obliged to notarize its bylaws, which can be formally constituted in a private document. At least 25 percent of the subscribed capital must be deposited with the National Bank of Argentina (Banco de la Nación Argentina), in either its main office or the branch corresponding with the company's domicile. The deposit can be withdrawn once the company's by-laws are registered by the Office of Corporations. The company must also publish a notice in the official gazette (Boletin Oficial), pay an incorporation fee with the National Bank of Argentina, and submit the invoice to the Public Registry of Commerce.
Companies located in the City of Buenos Aires must register their by-laws and other documents related to their incorporation with the City’s Public Registry of Commerce. The Company must file the proposed Articles of Association and By-laws, the publication in the Official Gazette, evidence of managers' and syndics' (the latter, if applicable) acceptance of position, evidence of the deposit of the cash contributions in the National Bank of Argentina, evidence of compliance with the managers' guarantee regime (filing of managers' performance bonds), and evidence of the reservation of the corporate name for approval with the City’s Office of Corporations. This process can take between 5 to 45 working days. Rules and regulations can vary by province and municipality, and companies should ensure they are aware of and adhere to local regulatory differences as necessary.
Once the IGJ registers the company, the company must request that the College of Public Notaries submit the company’s accounting books to be certified with the IGJ. The company’s legal representative must obtain a fiscal code and a tax identification number from the federal tax agency (AFIP by its Spanish acronyms) and register for social security. This procedure can be done online at www.afip.gob.ar or by submitting the sworn affidavit form No. 885 to AFIP.
The enterprise must also provide workers’ compensation for its employees. The agency that regulates and controls this type of insurance is the Workers’ Compensation Agency (Aseguradora de Riesgos del Trabajo). The company must register and certify their accounting of wages and salaries with the General Bureau of Labor, within the Ministry of Labor.
The Argentine government established in February 2016 a new Investment Promotion Agency that reports to both the Ministry of Foreign Affairs and the Ministry of Production. The Agency provides cost-free assessment and information to investors to facilitate operations in the country. More information can be found here: http://exportar.org.ar/. The Bank of Productive Investment Projects (Banco de Proyectos de Inversion Productiva; http://bapip.inversiones.gov.ar) is an online tool to facilitate connecting potential foreign investors with investment opportunities in Argentina.
According to the Ministry of Production, company size classifications differ by industry. The classification is illustrated in the following chart:
The National Fund for the Development of Micro, Small and Medium Enterprises provides low cost credits to small and medium-sized enterprises for investment projects, labor capital and energy efficiency improvement, with no distinction between national or foreign-owned enterprises. More information can be found here: http://www.produccion.gob.ar/fonapyme/.
Industrial Promotion
The Argentine government offers a number of investment promotion programs, with no discrimination between national or foreign-owned enterprises. Some of the investment promotion programs require investments within a specific region or locality, industry, or economic activity. Some programs offer refunds on Value-Added Tax (VAT), accelerated depreciation of capital goods for investors, or other tax incentives for local production of capital goods. Argentina also has free trade zones and a Special Customs Area in the province of Tierra del Fuego.
A complete description of the scope and scale of Argentina’s investment promotion programs and regimes can be found at http://inversiones.gob.ar/es/incentivos-la-inversion, http://www.produccion.gob.ar, and http://www.economia.gob.ar.
Information about programs that specifically apply to small and medium businesses may be found at http://www.produccion.gob.ar/fonapyme.
For programs for specific provinces, see:
Limits on Foreign Control and Right to Private Ownership and Establishment
All foreign and domestic commercial entities in Argentina are regulated by the Commercial Society Law (Law No. 19,550) and the norms issued by the corporate control agencies. All other laws and norms concerning commercial entities are established in the Argentina Civil and Commercial Code. All economic sectors are fully open to foreign equity ownership in Argentina except for the air transportation and media industries. Foreign capital participation in companies providing commercial passenger transportation, on both domestic and international routes, is limited to 49 percent per the Aeronautic Code Law No. 17,285. Additionally, the company must be incorporated according to Argentine law and must be domiciled in Buenos Aires. For the media sector, Law No. 25,750 establishes a limit on foreign ownership of newspapers, journals, magazines, and publishing companies, as well as on television and radio companies. According to Article 2 of the law, foreign companies are allowed to hold up to a 30 percent stake in the capital and voting rights of such companies.
The Argentine government limits foreign ownership of rural land through Law No. 26,737 (Regime for Protection of National Domain over Ownership, Possession or Tenure of Rural Land). Foreign ownership of rural land is restricted to a maximum of 15 percent of all national productive land. Individuals or companies from the same nation may not hold over 30 percent of that amount. Individually, each foreign individual or company faces an ownership cap of 1,000 hectares (2,470 acres) in the most productive farming areas, or the equivalent in terms of productivity levels in other areas. Approved in December 2011, the law is not retroactive. Section 11 of the law establishes that “for the purposes of this law and according to the Bilateral Investment Treaties (BITs) underwritten by the Republic of Argentina that are in force at the time this law becomes valid, the acquisition of rural land shall not be considered an investment as it is a non-renewable natural resource provided by the host country.” The law also establishes that a foreigner cannot own land that contains big and permanent extensions of water bodies or that they are located in riversides or water bodies with such features or land located near a Border Security Zone.
Privatization Program
No information available
Screening of FDI
No information available
Competition Law
The National Commission for the Defense of Competition (http://www.cndc.gov.ar) and the Secretary of Commerce, both within the Ministry of Production, have enforcement authority of the Anti-trust Law (Law 25,156). The law is aimed at ensuring the general economic interest and promotes a culture of competition in all sectors of the national economy.