On September 16 2013, the Decree No. 1315/2013 (the “Decree”) was published in the Official Gazette. The Decree regulates Law No. 25,922 of Promotion of Software, nowadays in force with the amendments introduced by Law No. 26,692 (the “Software Law”).
One of the first provisions set by the Decree is the creation of a Regime for the Software Industry Promotion (the “Regime”) into force in all Argentine territory. The Regime will be into force until September 31 2019, and those seeking to join the Regime must comply with the requirements indicated in the following paragraphs.
Those able to apply to the Regime are companies established in Argentina or authorized to act in its territory, which develop in Argentina and on their own as their main activity, one of those activities defined in article 4 of the Software Law. The Decree establishes that the activity will be considered as “main activity” when more than fifty per cent (50%) of such activity is related to the creation, design, development, production, implementation, and tuning of software systems and its associated technical documentation. The activity of self-development of software is specifically excluded from the Regime.
On the other hand, Software Law provides that companies which are interested in applying for the registration on the Regime must comply with at least two of the following conditions:
a) Proof of expenditure in activities related to research and software development.
b) Proof of a recognized quality standard applicable to products or processes, or the development of activities aimed at obtaining such standard.
c) Software exports, in this case it will be a requirement to be enrolled in the register of services exporters the Tax Authorities will create for this purpose.
Software Law determines that companies will be considered as beneficiaries of the law as from their inscription in the registry of beneficiaries of the Regime enabled by the enforcement authority (“Registry”).
For this purpose, the registration date will be the date of publication in the Official Gazette of the administrative act which declares its registration.
In relation with tax benefits, the Decree and Software Law provide the following:
1) The beneficiaries will have fiscal stability during the term of the Regime, that is to say, beneficiaries will not increase their total national tax burden since the inscription in the Registry.
2) The beneficiaries will be able to convert into a tax credit bond up to seventy per cent (70%) of the employer’s contributions effectively paid for the systems and subsystems of social security. Such bonds can be used for the cancellation of national tax of origin in software industry, in particular VAT and other national taxes and their advance payments, if applicable, excluding income tax.
3) The beneficiaries will not be subject to retentions or perceptions of VAT. To that purpose, the Tax Authorities will issue the corresponding proof of no-retention.
4) The beneficiaries will have a reduction of sixty per cent (60%) in the total amount of income tax corresponding to activities promoted, such amount determined each fiscal year. Such benefit will be applicable to income from national or foreign source. The Decree sets that the benefit will be applicable for fiscal years starting after the date of the beneficiary’s inscription in the Regime.
5) Imports of informatics products performed by those who enroll to the Regime are excluded of any kind of present or future restriction for the transfer of foreign exchange which corresponds to the payment of imports of hardware and other informatics components necessary for the software production.
Finally, the Software Law establishes that all those who are enrolled in the National Register of Software Developers and Computer Services created by the Department of Industry, Trade and Small and Medium Companies, which were previously registered and have accomplished all the requirements, will be considered according to the rules in force at the date of its filing or registration. In any case, they will be able to choose expressly and convincingly to re-enroll in the beneficiary’s register established according to the Regime within ninety (90) days since the Regime came into force.
The Decree came into force on September 17 2013.