Argentina Fintech Legal News #5
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Fintech Department Report | Argentina Fintech Legal News #5
Dear Sir or Madam,
From the Fintech department of Beccar Varela please find our Newsletter Nº 5 in which you can find a brief summary of the recent legal developments that we consider relevant for the Fintech environment in Argentina.
First regulation on the operation of PSPs
Funds credited in “payment accounts” of their clients must remain always available and supported with deposits in Pesos in local bank accounts.
Some days ago, different media publications anticipated that the new authorities of the Central Bank of Argentina (BCRA) would start formally regulating the activities of non-banking fintechs (so far unregulated), with the aim to set more restrictive rules that would balance competition with traditional banks.
In that sense, on January 9, 2020, the BCRA issued Communication “A” 6859, by means of which it began to regulate certain aspects of the operation of the non-banking PSPs, defined as “legal entities that, without being financial entities, perform at least one function within a scheme of retail payments, in the global framework of the payment system, such as offering payment accounts -accounts of free availability offered by a PSP to its clients to order and/or receive payments-”.
In particular, the Communication sets forth that the funds of the clients that are credited in payment accounts offered by PSPs must be available at all times, for an amount at least equivalent to the one credited in the payment account.
In addition, the rule establishes that 100% of the funds of the clients must be deposited -at all times- in Pesos, in on-sight accounts in financial entities of the country.
Exceptionally, it is permitted that, with the express request of the client, the funds credited in its payment account be applied to “money common funds” (regulated by the National Securities Commission), as certain PSPs were offering so far. However, the Communication requires that, in those cases, the invested amounts must be informed separately from the other funds.
On the other hand, the regulation provides that, for the performance of transactions on its own behalf (such as payment to suppliers, payment of salaries, etc.), the PSPs must use a different account than the one where the funds of their clients are deposited.
These restrictions (which must be operative no later than January 31, 2020), aim to avoid that PSPs perform financial investments with the funds of their clients for the PSPs benefit while those funds are not withdrawn. This limitation, in reality, does not represent a huge regulatory change (given that the activity of “financial intermediation” was always reserved to banks), but brings clarity about the interpretation that the regulator has about what activities can (or not) perform the PSPs with the funds trusted by their clients.
The most significant innovation here in our view, is that, with this Communication, the BCRA for the first time decided to issue a specific regulation on the operation of the PSPs and to submit them (and their authorities) to the sanctions of the Financial Entities Law for any breach to these rules (sanctions that may go from simple warnings to fines, disqualifications and even suspensions or prohibitions to operate).
In this sense, in its press announcement, the BCRA qualified this regulation as “a valuable initial step for the regulation of the PSPs, to be aligned with other countries of the region and of Europe that already count with a legal framework for payment service providers (PSP)”. Based on that, we expected that additional regulations will be issued for the ecosystem in the near future, which might eventually include (as in other countries) registration requirements of some sort so to identify and have a stricter control over PSPs.
Lastly, please note that several media also predicted that the regulators were going to restrict transfers among virtual accounts belonging to legal entities or that the Tax on Debit and Credits in Bank Accounts was going to be extended to virtual accounts held by legal entities. However, no official regulation was issued over these matters so far.
Tax PAIS over transactions with cards
Transactions that imply the acquisition or use of foreign currency
On December 23, 2019, the new Law 27,541 (of Social Solidarity and Productive Reactivation) was published in the Official Gazette. This recent law declared the public emergency in the country and, among other things, it established a special transitory tax over certain transactions that imply, directly or indirectly, the acquisition and/or use of foreign currency.
Concerning the fintech ecosystem, this new tax (named “Tax For an Inclusive and Solidary Argentina” -PAIS-) reaches, among other transactions:
(i) Payments for the acquisition of goods, services or rentals in foreign countries, which are cancelled with the use of credit, purchase or debit cards or any other equivalent payment instrument that the regulation may determine, including those transactions for withdrawal of cash or advances offshore, as well as purchases performed through websites, and/or other non-present modalities, in foreign currency; and
(ii) Payments of services furnished by non-resident subjects, which are cancelled with the use of credit, purchase or debit cards or any other equivalent payment instrument that the regulation may determine.
The rate of the tax was established in 30% over the full amount of each transaction (except for the so called “digital services”, which are levied at a rate of 8%, pursuant to Decree 99/2019 dictated on December 28, 2019).
Even though the obligation of payment of the tax falls over the purchaser of the good, service or rental, in the case of transactions with cards the entities that collect the liquidation from the cardholders are designated as withholding agents of the tax. If aggregators intervene in the middle of the chain, the regulations may establish the way in which the liquidation and withholding of the tax should be made among the different participants of the payment system.
On January 6, 2020, the Federal Tax Authority (AFIP) issued General Resolution 4659/2020, through which it regulated certain questions related with this tax. For further information, we refer to the report prepared in that respect by our Tax Law Department.
Upcoming amendment of the Crowdfunding regime
The general public was invited to participate in the regulation process
On December 10, 2019, the National Securities Commission (CNV) published the General Resolution 822/2019, by means of which the general public was invited to participate in the drafting of the regulation for the “Amendment of the Crowdfunding Platform”. People interested in participating in the process had time until December 30, 2019 to submit any opinions and/or proposals.
For more details about the changes proposed by the regulator, we refer to the report prepared by our Capital Markets Department.
Do not hesitate to contact us should you require any further information on these matters.
Daniel Levi
María Shakespear
Pablo J. Torretta
Luciana Liefeldt
Andrés Schreiber