12/12/2023 – Through a televised announcement, the new Minister of Economy, Luis Andrés Caputo, announced the new economic measures that will be implemented in the coming days.

  1. State labour contracts with less than one (1) year of validity will not be renewed.
  2. Suspension of official advertising to media for one year.
  3. Reduction from 18 Ministries to 9 Ministries and from 106 Secretariats to 54. This implies a 50% reduction in hierarchical positions and a 34% reduction in total political positions of the National Government.
  4. Minimization of discretionary transfers from the National State to the Provinces.
  5. No new public works will be tendered, and approved tenders that have not yet begun execution will be canceled.
  6. Reduction of the Energy and Transport subsidies.
  7. Maintenance of the Potenciar Trabajo Plan, Asignación Universal por Hijo, and Alimentar Card (the Asignación Universal por Hijo is increased by 100% and the Alimentar Card by 50%).
  8. Official exchange rate adjustment to 1 US$ = $800.
  9. Elimination of prior authorization for imports. The SIRA system will be a statistical information system.

NEGOTIATIONS WITH THE INTERNATIONAL MONETARY FUND (IMF) AND INTERNATIONAL ORGANIZATIONS:

The Central Bank of the Argetine Republic (BCRA) published in the News Section of 12.12.2023, that formal dialogue with international organizations, including the IMF, was initiated and progressed rapidly in order to clear the uncertainty in relation to the disbursements agreed upon for paying off upcoming maturities. Argentina will initiate the formal process of requesting a waiver in relation to the targets agreed in August of this year and will conduct negotiations to improve the terms of existing financing.

MONETARY POLICY RATE:

The Central Bank of the Argentine Republic has deemed it appropriate to maintain the monetary policy rate unchanged. The rate for Liquidity Letters (Leliq) at 28 days will remain at 133%, and it has been decided to decrease the rate for passive repos, which will be set at 100%. The BCRA announced the reactivation of operations in the Single and Free Exchange Market. On 12.11.2023, the BCRA issued Communication ‘A’ 7915, which established that, from the same date, all operations involving the demand for foreign currency in the exchange market, including those carried out by financial and exchange entities, would require prior approval from the BCRA. These provisions would cease to be effective from 12.13.2023, as provided in BCRA Communication ‘A’ 7916 dated 12.12.2023; therefore, the exchange market returned to operate without restrictions and/or limitations from this date.”

The BCRA communicated the liberation of imports and established a new access system to the Single and Free Foreign Exchange Market.

By means of Communication “A” 7917 of the BCRA dated 12.13.2023 it was established:

  • – For the payment of imports of goods which, as from December 13, 2023, as regards access to the foreign exchange market:
    • -it will not be necessary to have a declaration made through the Argentine Republic’s Import System (SIRA) in “exit” status as a requirement to access the foreign exchange market; nor to validate the operation in the “Single Current Account for Foreign Trade” system; and
    • -entities may grant access to the foreign exchange market without the prior approval of the BCRA to make deferred payments for new imports of goods with customs entry registration, when in addition to other requirements, it is verified that the payment complies with the schedule according to the type of good.
  • – for the payment of services rendered by non-residents, regarding access to the foreign exchange market:
    • -it will not be necessary to have an affidavit made through the System of Imports of the Argentine Republic and Payment of Services Abroad (SIRASE) in “approved” status, as well as to validate the operation in the “Single Current Account for Foreign Trade” system; and
    • -entities may access the foreign exchange market without the prior approval of the BCRA to make payments for services rendered by non-residents, to make payments for new imports of services rendered or accrued as from 12.13.2023, and to make payments for services rendered and/or accrued by non-residents until 12.12.2023; except for exceptions.
  • Additionally, all transactions must be validated, at the time of accessing the foreign exchange market, in the online system implemented for such purpose by the BCRA.
  • Furthermore, Communication “A” 7917 of the BCRA repeals items: 3.19 Access with Certification of entry of new financial indebtedness with foreign countries; 3.20 Access associated to a financial indebtedness with foreign countries originated in debt refinancing; 10.10 Complementary provisions referred to SIRA and the Single Current Account for Foreign Trade; 10. 11 Complementary provisions referring to the relation between payments and officializations of imports of goods as from 1/1/2020; 10.12 Complementary provisions referring to the relation between payments of imports of goods as from 1/1/22 and the SIMI limit category A for the year 2022; 10.13 Procedure for conformity orders under the provisions of items 10.11 and 10.12; 10.14 Complementary provisions associated to the category of SIMI declarations. 12.1 Tariff items referred to in item 10.3.2.5;
  • 12.4 Tariff positions eligible for payments with a SIMI category C in the context of point 10.14.2.3; 12.5 Tariff positions subject to a minimum period of 90 consecutive days from the customs registration under point 10.14.2.5; 12.6 Tariff positions of inputs for local production of goods necessary for the construction of works contracted by the public sector of the Consolidated Text on Foreign Exchange and Exchange Norms; as well as Communication ‘A’ 7904 from the BCRA, which regulates the payment of principal and interest on financial indebtedness with abroad.

WHICH MEASURES HAVE AN IMPACT ON EXCHANGE AND TAX MATTERS? WHAT IS THEIR IMPACT?

  1. Official exchange rate adjustment. The official exchange rate moved from $366.45 to $800.00 per dollar.
  2. Export Increase Program. Through Decree 28/2023 of 12.13.2023, it was established that the counter value of the export of services provided in the country, whose use or effective exploitation takes place abroad, and of the export of goods included in the Common Nomenclature of MERCOSUR, including the cases of pre-financing and/or post-financing of exports from abroad or an advance settlement, must be entered into the country in foreign currency and/or negotiated, 80% through the Free Exchange Market, with the exporter having to conduct buy-sell operations with negotiable values acquired with settlement in foreign currency and sold with settlement in local currency for the remaining 20%. Prior to the issuance of Decree 28/2023, it was required to enter into the country in foreign currency and/or negotiate, 50% through the Free Exchange Market and for the remaining 50%, carry out the operations mentioned there.
  3. Tax for an Inclusive and Solidarity Argentina (PAIS). Through Decree 29/2023 of 13.12.2023, some adjustments were made in the PAIS Tax:
    • The tax rate of the PAIS Tax for the acquisition of freight and transport services related to import or export was reduced from 30% to 17.5%, applying to the price, net of taxes and fees, in relation to the covered services;
    • for the import of goods included in the Common Nomenclature of Mercosur (N.C.M), with the exception of: (i) certain tariff positions; (ii) inputs and intermediate goods directly linked to products of the basic food basket; and (iii) other goods related to energy generation; the PAIS Tax will be determined on the total amount of the operation by which foreign currency notes and currencies are purchased, not having to consider the amount of the services that are covered by the tax, and the tax rate will be reduced to 17.5%;
    • the tax rate of 7.5% was raised to 17.5% for operations of goods and services, and the PAIS Tax of 30% remains for personal, cultural, and recreational services and luxury goods, and 25% for the rest of the services; and
    • the General Resolution of AFIP 5464/2023 dated 12.12.2023, modified the scheme of the payment on account of the PAIS Tax, and established that: (i) for imports of goods included in the tariff positions of the Common Nomenclature of Mercosur (N.C.M), the amount of the payment on account will be determined by applying a tax rate of 28%; and it will be 16.625% for the import of goods from the Common Nomenclature of Mercosur (N.C.M.), with some exceptions.
  4. Modification of the perceptions of the Income Tax and/or Personal Property Tax. On 12.12.2023, the Federal Administration of Public Revenues issued General Resolution No. 5463/2023, which modifies the regime of perception of the Income Tax or the Personal Property Tax that applies to some operations covered by the PAIS Tax. Thus, it establishes that the perception made to the amounts to be received for certain operations, will be 30%.