Tax Department Report | Promotion Regime of the Knowledge Economy.
Dear Sir or Madam,
Through Law Nº27.506 (published in the Official Gazette on June 10th, 2019), the National Congress created the “Promotion Regime of the Knowledge Economy”. This new promotion regime is created as an expansion of the “Software Industry Promotion Regime” established by Law N°25.922, in force until 31 December 2019.
This new Promotion Regime will be in force from 1 January 2020 until 31 December 2029 and will be applicable to the following activities:
• Software and digital services.
• Audiovisual production and postproduction.
• Biotechnology, bioeconomy, biology, biochemistry, microbiology, bioinformatics, molecular biology, neurotechnology and genetic engineering, geoengineering and its tests and analysis.
• Geological and prospecting services and services related to electronics and communications.
• Exportation of professional services.
• Nanotechnology and nanoscience.
• Aerospace and satellite industry, space technologies.
• Engineering for the nuclear industry.
• Manufacturing and maintenance of goods and services aimed at solutions, digital processes and automation in production.
The new Regime will be applicable to those who develop in the country, by their own, as their main activity, one of the above-mentioned activities and are registered in the National Register of Beneficiaries of the Knowledge Economy Promotion Regime (created by this law) and have at least two meetings of the following requirements:
• Prove the accomplishment of continuous improvements in the quality of its services, products and/or processes, or through a recognized quality standard applicable to its services, products and/or processes.
• Accredit indistinctly and/or jointly, the realization of expenditures in activities of: i) Research and Development in the aforementioned activities in a minimum of 3% of its total billing; and/or ii) training of the employees affected to the promoted activities in a minimum of 8% of the total wage bill.
• Accredit the realization of exports of goods and/or services related to any of the promoted activities of, at least, 13% of the total turnover corresponding to those activities.
This regime establishes the following benefits:
• Fiscal stability.
• Reduction of employer contributions.
• Tax credit equivalent to 1.6 or 2.0 times the amount of the employer contributions, which must be applied to the payment of income tax and value-added tax.
• Reduction of the Income Tax rate to 15%.
• Exclusion of the VAT withholding regimes.
• Possibility of deducting credit for analogous taxes effectively paid or withheld abroad, in the case of Argentine source earnings.
From the enactment of the law and until 1 January 2020, the beneficiaries of the Software Industry Promotion Regime (Law Nº25.922) will have to file an application in order to be included in this new Regime.
To access to Law Nº27.506:
Should you require any further information on this matter, please do not hesitate to contact us.
Santiago L. Montezanti