BCRA Communication “A” 7916: normalization of the Exchange Market for demand operations — BCRA Communication “A” 7917: payment of imports of goods and services — Necessity and Urgency Decree No. 28/2023: new “Exporting Dollar” — New Exchange and Monetary Policy Framework.
Banking & Financial Institutions Department Report | BCRA Communication “A” 7916: normalization of the Exchange Market for demand operations — BCRA Communication “A” 7917: payment of imports of goods and services — Necessity and Urgency Decree No. 28/2023: new “Exporting Dollar” — New Exchange and Monetary Policy Framework
Today, the provisions of Communication “A” 7916, issued yesterday by the Central Bank of the Argentine Republic (BCRA), come into force, which provides that from today foreign currency “demand” exchange operations can be carried out again. Minutes ago, the BCRA also issued Communication “A” 7917, under which a new payment regime for imports of goods and services was established.
On the other hand, today the National Executive Branch (PEN) issued Decree of Necessity and Urgency No. 28/2023 (“Decree 28/23”), through which a new exchange rate is established for exporters, by the relaunch of the Program of Export Increase (the “Program”).
Finally, we highlight some paragraphs of what was published by the BCRA on its website about its new exchange and monetary policy plan.
Below is a summary of the main effects of these measures.
Communication “A” 7916
On December 11th, the BCRA published Communication “A” 7915, through which foreign currency demand operations in the Exchange Market were suspended indefinitely (see our report on this matter). Communication “A” 7916 comes into force today, nullifying the provisions established by the previous Communication. Consequently, from today people can operate using foreign currency if complying with the current conditions and requirements for each type of operation.
In this scenario, it must be considered that by application of the provisions of PEN Decree No. 29/2023 and General Resolution No. 5464 of the Federal Administration of Public Revenue (AFIP) (whose provisions are effective as of today) the PAIS tax will be applied for certain payments of imports, freight, etc.
Communication “A” 7917
The BCRA published this regulation, modifying how the exchange market can be accessed to pay for imports of goods, payments in advance, and demand payments, as well as payments for services abroad.
Below, we provide a summary of Communication “A” 7917 main aspects.
(A). Payments for imports of goods
– It is no longer necessary to have a statement made through the Import System of the Argentine Republic (SIRA) in “OUTPUT” status, nor to validate the operation in the “Single Foreign Trade Current Account” system of the AFIP.
– A payment deadline scheme is established for new imports with customs entry starting today, depending on the concept:
* No minimum term for concepts related to oil – or oil derivatives- and energy.
* 30 days from your entry registration, payment of the FOB value of certain goods related to the pharmaceutical industry, fertilizers, and others can be made.
* 180 days from your customs entry registration, payment of the FOB value of certain goods related to the automotive industry and others can be made.
* For the remaining goods, a scheme of combined terms and proportions is applied: (i) 25% from 30 days; (ii) an additional 25% from 60 days; (iii) an additional 25% from 90 days; and (iv) the remaining 25% from 120 days.
* Freight and insurance that are part of the agreed purchase condition may be paid from the first date on which the importer has access to the goods included.
– Payments for imports entered previously may be made without requiring prior approval from the BCRA if a series of additional requirements to the general ones are met, of which we highlight the following:
* The payment corresponds to operations financed or guaranteed by local or foreign financial entities.
* The payment corresponds to operations financed or guaranteed by international organizations or official credit agencies.
* For the equivalent of the amount to be paid, there is a “Certification for the foreign exchange access regimes for the incremental production of oil and/or natural gas (Decree No. 277/22)”.
* For the equivalent of the amount to be paid, there is a “Certification for direct investment contributions within the framework of the Regime for the Promotion of the Knowledge Economy (Decree No. 679/22)”, and the payment is made through exchange or regulated arbitration in BCRA regulations.
* An online BCRA system is planned in which operations must be validated. There are no further clarifications about its operation in the regulation.
(B). Service Payments
– It will no longer be necessary to have a statement from the System of Imports of the Argentine Republic and Payments for Services Abroad (SIRASE) in “APPROVED” status nor to validate the operation in the “Single Foreign Trade Current Account” system of the AFIP.
– There are no additional limitations to the general ones to make payments for services that meet the following requirements:
* These are payments under certain concepts (e.g. transportation services, health, travel, credit or purchase cards, etc.).
* Payments for freight services for imports of goods accrued as of 12/13/23 and the payment is made once, from the date of provision of the service, a period equivalent to which payment for the transported good could begin as established. explained above.
* Personal, cultural, and recreational services provided as of 12/13/23, and payment is made after 90 days from the provision.
* Other services from unrelated counterparties for 30 days, and if they are linked counterparties, 180 days.
– Payments for services accrued before 12/13/2023 may be made, without the need to have prior approval from the BCRA, in the following cases:
* The payment corresponds to operations financed or guaranteed by local or foreign financial entities.
* The payment corresponds to operations financed or guaranteed by international organizations or official credit agencies.
* For the equivalent of the amount to be paid, there is a “Certification for the foreign exchange access regimes for the incremental production of oil and/or natural gas (Decree No. 277/22)”.
* For the equivalent of the amount to be paid, there is a “Certification for direct investment contributions within the framework of the Regime for the Promotion of the Knowledge Economy (Decree No. 679/22)”, and the payment is made through exchange or regulated arbitration in BCRA regulations
– An online BCRA system is planned in which operations must be validated.
(C). There are certain exceptions provided for being able to make payments with pending customs entry registration or deferred payments, as well as any other payment in advance of the deadlines and dates explained above. In general, these are cases in which payments are made with the receipt of new funds from abroad (due to new debts, advances or pre-financing, etc.), or special regimes for increasing exports, similar to those that were already in force before this regulation.
The regulation also repeals other previous points and rules, which regulated how this type of exchange operations to enable payments for imports of goods and services previously had to be carried out.
Decree 28/23
The exchange benefit established by this Decree is similar to that provided by the previous Decree of Necessity and Urgency No. 597/23 (the “Decree 597/23”), whose regime was in force until 12/10/23 (see our report on this matter).
As in the last relaunches of the Program, all exports of goods included in the Common Nomenclature of Mercosur (“N.C.M.”) and all services carried out within the framework of subparagraph c) of section 2 of article 10 of the Customs Code are reached (the exports”).
Decree 28/23 establishes that, for an indefinite period, the equivalent value of the Exports carried out may be entered in the following way:
– 80% must be entered and settled in the Exchange Market (i.e., at the “official” exchange rate);
– For the remaining 20%, exporters will be able to carry out operations colloquially known as “cash with entry settlement”, which consist of carrying out a purchase and sale of negotiable securities acquired with settlement in foreign currency and sold with settlement in local currency, at a rate of implicit exchange rate higher than the official price (“Cash with Entry Settlement”).
It must be considered that the rate to be able to carry out Cash with Entry Settlement is now 20% (before it was 50%).
The rate of export duties (i.e., withholdings) will be applied to the total counter value received for the Exports. This means that this rate applies to both the 80% settled in the exchange market and the 20% deposit through Cash with Entry Settlement.
Payment of Export Duties (and other taxes) must be made under the terms, deadlines, and conditions established by current regulations.
At the time of sending this report, Decree 28/23 has not yet been regulated by the BCRA, but we expect a regulation along the same lines as with previous versions of the Program (we refer again to our summary).
New Exchange and Monetary Policy Plan
The BCRA recently published on its website a summary of its new exchange and monetary policy plan. Although this publication is not normative, its text gives indications of future regulations. In this context, we highlight the following paragraphs:
– Normalization of Commercial Debt Payments:
“Given the severity of the inherited situation, a process of evaluating financing options with international financial entities has begun. The improvement in reserve liquidity obtained in the short term through these sources will be used to normalize the payment of commercial debts and reduce uncertainty regarding the provision of financial services […]”.
– Payments for Imports and Services:
“The BCRA will work to simplify the payment system for imports of goods and services, eliminating any requirement linked to obtaining authorizations through the SIRA or SIRASE, and will also annul the requirement for the Single Trade Account Certificate. Exterior of AFIP. “Imports that take place in the future may be paid respecting the international trade deadlines determined by the BCRA, defined according to tariff positions.”
Do not hesitate to contact us if you require any further information on this matter.
Sincerely,
Pablo J. Torretta