Doing business in Argentina

Establishing a Business Presence

  • Permanent Structures

To conduct business on a permanent basis a foreign company can either:

  1. Start a local entity or participate in an existing one, or 
  2. Qualify a representative or a branch. 

Foreign companies wishing to participate in local companies or start a new one, must file and register with the Public Registry of Commerce (PRC):

  1. Copy of their articles of incorporation and bylaws; 
  2. Proof that they are validly existing according to the laws of the country where they were formed; and 
  3. Corporate resolution appointing legal representatives and establishing a local   domicile. 

They shall also comply with an information process regarding business prohibitions or restrictions in their place of origin, the existence of other agencies or branches outside Argentina and ownership of fixed assets in their country of origin. 

In the case of Vehicles Companies -for investing in other companies-, the compliance shall be fulfilled by its controlling entities.


  • Suitable Corporate Forms

Commercial activities in Argentina are usually carried out through one of the following: 

  1. Corporation (sociedad anónima or SA), 
  2. Limited liability company (sociedad de responsabilidad limitada or SRL), or 
  3. Branch of a foreign company. 

The first two are the most common, since they limit the liability of the parent company to the extent of its interest in the local company. 

 The structure and rules for SAs and SRLs are quite similar although the latter has slightly less operational costs. Certain activities such as banking and insurance require that the company be incorporated as an SA. 

The minimum stock capital required for SAs is equivalent to some USD 12,500. There is no minimum requirement for SRLs. However, the stock capital needs to be consistent with the corporate purpose. SAs and SRLs can be managed and represented by one or more individuals, in which case decisions shall be adopted by a majority vote. The board shall hold meetings at least quarterly, and the majority of directors need to be Argentine residents (there being no nationality requirements). The directors must also register with the tax and social security authorities.

Companies under permanent governmental supervision as well as specific situations also require notices in a nationwide newspaper. The summoning rules for SRLs are more flexible. 


  • Wholly Owned Entities

Corporate rules require at least two stockholders. According to the regulations and policies in force in the city of Buenos Aires, the minority holder shall own no less than 5 percent of the stock capital. If stockholders are foreigners, they shall own no less than 10 percent. The two stockholders may belong to the same group; thus, ultimately, the local company may be a wholly owned entity.


  • Joint Ventures

Corporate rules provide for contractual joint ventures, which are not granted legal personality and thus do not have a legal existence separate from their members. These agreements need to be registered with the local PRC in order to have effects vis-à-vis third parties and must contain term of duration, name, domicile, liability of each of the members, and the details on the decision-making process, among other specifications.


  • Investments in – Mergers with Existing Entities

There are basically two ways of participating in or acquiring a local business:
a) Purchase of shares: the continuity of the legal entity entails risks associated with hidden liabilities, particularly tax and social security ones; 

  1. b) Asset purchase: this option provides reasonable protection against hidden liabilities if executed through the Transfer of Going Concerns Act and federal and provincial tax regulations. This alternative is more expensive than a “share” deal.


Merger processes are quite common in Argentina. Subject to compliance with certain fiscal requirements, corporate reorganizations (mergers included) can be carried out in a tax-free fashion. 


  • Agency/Reseller/Franchising/Distribution Networks

Agency, distribution, and franchising agreements are governed by the recently introduced Civil and Commercial Statute.

Parties can, in principle, freely regulate their relationship.

Agency: In an agency agreement, the principal entrusts the agent with the promotion and marketing of the former’s business. The agent sponsors a principal business and receives a commission from the sales of the products or services. The agent can either simply intermediate in the sale of goods by marketing the products and/or services, and/or, on the other hand, can act as attorney in fact of the principal, carrying out negotiations and executing purchase agreements on its behalf. The main characteristic of this structure is the financial and operative independence of the agent. The agent is an independent contractor, not a subordinated businessman or an employee.

Distribution agreements also make use of independent contractors but—in this structure—the middleman does not sponsor or handle the products or services as an attorney in fact. The distributor acquires the products or services with the purpose of reselling them. In order to be considered a distributor, it needs to have an established independent organization in order to provide services related to the said products or services. As opposed to the agent, the distributor carries out the invoicing, delivery, and post-sale servicing at its own risk and receives commercial objectives, quotas, and other instructions from the principal. 

Franchising agreements: its use has spread out quite widely. Though the franchisee is an independent contractor, the contractual bond is stronger than in the distribution agreement, in terms of organization, trademark, objectives, and overall economic dependence. By this agreement the franchisee uses the franchisor’s business model, commercialization system, and know-how.

Representative Offices and Other “Non-Permanent” Establishments: Foreign companies may also perform activities through a branch with a duly registered representative. Branches, as opposed to the local corporate entities, do not limit the liability of the parent company. Branches prepare their annual financial statements separately from their parent and file them with the PRC. There is no requirement for minimum branch capital, with the exception of activities such as banking or insurance.


    Investment Issues and Tax Incentives


  • Sensitive Economic Sectors/Restrictions on Foreign Ownership

Freedom to set up a business by foreign investors is the prevailing principle. However, the “equal treatment” principle recognizes certain exceptions: inter alia, in public procurement, a preference is given to goods of domestic origin and to local services (“Buy Argentina Regime”), such as media and broadcasting.

However, the more attractive sectors for foreign investors, such as mining, forestry, leather, renewable energy, petrochemicals, agricultural machinery, biotechnology, vegetable oils, wine, cultural-related industries, software, outsourcing, and tourism, have no restrictions on foreign ownership.

  • Legal Treatment for Foreign Investment

As a general principle, foreign investors wishing to invest in Argentina do not require prior governmental approval, except for certain specific regulated areas (for example, media) or for general applicable regimes such as antitrust regulations (for example, the mandatory merger notification system). They enjoy the same status and have the same rights that local laws grant to Argentine investors.

  • Treaties on Foreign Investment Protection

Argentina has diplomatic relationships with almost all countries and is a member of several international organizations such as the World Bank, the International Monetary Fund, MERCOSUR (South American Common Market Treaty), and the International Centre for Settlement of Investment Disputes (ICSID).

Argentina has entered into several Bilateral Investment Treaties, so as to improve the guarantees provided by the Foreign Investment Law to investors, by enhancing (i) protection against expropriation; (ii) free transfer of income from local subsidiaries; (iii) fair and equitable treatment; (iv) non-discrimination; and (v) alternative dispute resolution mechanisms, whereby an investor whose rights have been violated can choose between resorting to local jurisdiction, or to have recourse to international arbitration. Since 2001, many foreign investors have asserted claims against Argentina before ICSID, many of which have been resolved and terminated.

  • Immigration and Visa Requirements

For a foreigner to work in Argentina, the most usual procedure is to obtain a temporary residence visa, which enables him or her to work in the country, freely enter and leave Argentina, obtain an Argentine ID and driver’s license and bring personal assets into Argentina. The process is simple and usually fast.

In cases where only a short stay is needed, a Transitory Residence Visa can be requested, which allows foreigners to stay legally in Argentina during three months performing technical activities. 

Even though the Argentine Law distinguishes between “Mercosur” and “Non-Mercosur” nationals, the applicable procedure is substantially the same in either case.


  • Taxation of Business and Cross-Border Transactions

Several tax aspects should be taken into consideration in connection with Doing Business in Argentina either with a presence in the country or directly from abroad. 

Argentina has three different levels of taxation: 


  1. The federal level with income tax, minimum deemed income tax, value added tax (VAT), excise taxes, personal assets tax, and tax on debits and credits on bank accounts as the main taxes, besides custom duties as a federal levy; 
  2.  The Provincial and Federal (city of Buenos Aires) district level with turnover tax and stamp tax as the leading taxes; and 
  3. The Municipal level that normally imposes taxes on services such as health and security. The taxes that may normally affect cross-border business are income tax, VAT, and stamp tax.


  • Argentina has adopted the worldwide principle of taxation and thus, resident taxpayers are subject to income tax on their worldwide income with an ordinary foreign tax credit as a unilateral method for avoiding double taxation. The tax is assessed on taxable income at the rate of 35 percent. 
  • Non-resident taxpayers are (a) subject to tax only on Argentine source income, which is determined under certain tests, and (b) generally subject to tax on notional taxable income at a certain percentage determined for the relevant type of income involved. The effective tax is determined applying the 35 percent withholding tax rate on such notional income.
  • Residents and non residents are subject to capital gains tax. Any sale of shares or quotas issued by local companies would be subject to taxation except from those performed through the Stock Exchange Market. The applicable tax rate is 15% and is applied over the net income obtained. Tax base for foreign residents could be determined by finding the difference between the sale and the acquisition prices or by using a presumed tax base of 90% over the sale price. Tax on dividends is also applied for both foreign and local residents. 
  • The taxation for technology transfer, know-how, and technical assistance is not only ruled by the Income Tax Law but also by the Transfer of Technology Law, which contains regulations with tax consequences such as deductibles for income tax purposes and for applying reduced withholding tax rates.
  • The taxation of permanent establishment (PE) is scarce on rules determining whether it is an Argentine or foreign PE and regarding how to attribute its income since PEs are subject to tax on worldwide income, as is any corporation.
  • Transfer pricing rules have been adopted in Argentina and need to be reviewed in cross-border transactions. Different methods are foreseen for determining the arm’s-length range, and the local taxpayer has to choose which is the most appropriate for the given transaction.
  • Though thin capitalization (2:1 debt equity ratio) rules have been adopted, not many situations are caught. When business financing interacts with treaty partner countries, some arguable rules may affect the international transaction.


Doing business either from or to a low-tax jurisdiction is always more burdensome as the income tax rules either require more evidence on the transaction or increase the taxation. Likewise, the Argentine income tax treaty network needs to be analyzed in cross-border transactions since it limits the Argentine source taxing rights in many circumstances.

  • Minimum deemed income tax is levied on the assets held at the end of the fiscal period at a rate of 1 percent. The income tax paid during a given year is taken as credit for the minimum deemed income tax payable in such year; any excess income tax does not give rise to a credit. The minimum deemed income tax paid in a given year may be used as a tax credit toward the same tax liability of the following 10 years.
  • As a general rule, the Personal Assets Tax is a tax on net wealth of individuals and estates that should not affect cross-border transactions. However, in the case of participations in Argentine companies held by non-resident companies, it is presumed that the indirect owner is an individual or an estate and the obligation of the local company is to pay a tax assessed at 0.5 percent on the value of the participation held by the non-resident under certain rules. 
  • Though VAT (levied at the general rate of 21 percent with reduced 10.5 percent rates) is a tax that generally affects local transactions, it may sometimes affect a cross-border deal as well. Exports of goods are clearly zero-rated, but exports of services receive such treatment only when the service supplied in Argentina is effectively used or exploited abroad.
  • Stamp tax is a local tax levied on acts or contracts with economic content that are either executed or have effects in a given local jurisdiction. As it is a local tax, each jurisdiction has its own rules. The tax is assessed on the economic value of the contract and the average tax rate is 1,2 percent. The city of Buenos Aires has reintroduced this tax after several years at a general rate of 1 percent. Contracts implemented through an offer letter, which is accepted by an act of the addressee, have worked as a way to avoid the stamp tax and have been supported by case law.


  • Labour and Employment

Argentine labour legislation is mainly contained in the Employment Contract Act, the regulations issued thereunder, and the collective bargaining agreements applicable according to the employer’s main line of business. Hiring alternatives under local law are the following:

    1. Permanent contract: Argentine labour law sustains the “indefinite” term contract as the rule. It is not required to be written, and it has a mandatory trial period of 90 days, within which the employer may terminate the same without severance payment. 
    2. Part-time contract: applicable to those who work for less than two-thirds of the normal working day.