Fintech Department Bulletin | Fintech Legal News in Argentina | No. 12.
In this bulletin, you will find a selection of the main legal news related to the fintech and digital banking market in Argentina.
The amended Regime for the Knowledge-Based Economy was approved
With adjustments introduced by the Senate
After several months of debate, on October 7th, 2020, the National Congress finally approved the bill of law that amends the Promotional Regime for the Knowledge-Based Economy (Law 27,506).
The IT and digital industries were waiting for the amendment to be approved, given that this regime grants significant tax benefits which application has been suspended until the definition of this reform.
As we mentioned in former reports, this bill of law (which suffered certain adjustments during its debate in the Senate) introduced amendments to the original regime, aiming at readdressing the benefits to certain sectors and at reinforcing the requirements for qualification.
Among other changes approved by this draft, we highlight the following: (i) The companies that intend to apply for the regime will need to demonstrate that they are in current performing of all their obligations of tax, labor, union and social contribution nature, by means of a certificate that shall be granted by the relevant entities; (ii) Minimum percentages of exports, investment and continuous training are reduced for micro and small companies, while the hiring and training of vulnerable sectors is incentivized; (iii) The qualifying requirements are reduced to new companies and are waived for micro new companies during the first 4 years; (iv) Satisfaction of all requirements shall be validated each 2 years, including the obligation to maintain and/or increase the number of hired personnel; (v) Self-development is expressly excluded for the computation of the qualifying activity; (vi) Benefits for social contributions are limited; (vii) Additional benefits will only be granted if the company increases its personnel with highly qualified or vulnerable employees; (viii) Income tax benefits are now reduced for medium and large companies; (ix) Benefits for withholdings in VAT will now be granted only to companies that export; (x) All benefits may be cancelled by operation of law if the personnel of the company is reduced and not reinstated in 60 days; (xi) Contributions that companies need to make to a common fund for development of the industry are increased.
The approved bill establishes that, while the mandatory isolation for COVID-19 is still in force, companies may apply for the regime without need to fulfill all requirements at this stage (and comply with them within 180 days after the isolation is over), provided that those companies increased their personnel during 2020.
Transactions with cards in foreign currency
Limitations for the purchase of FX for savings and new tax withholding
By means of Communication “A” 7106, last September 15th, the Central Bank of Argentina (BCRA) determined that transactions with credit cards in foreign currency, and with debit cards in foreign currency that are debited against Pesos, performed after September 1st, 2020, will be deducted from the monthly limit of US$200 that individuals may acquire for savings purposes through the official FX market.
The deduction will be computed for the calendar month that is immediately subsequent to the months in which the purchases are made and, if the transactions with cards exceed the US$200 monthly limit, the deduction will extend for the following months until the full amount is set-off (namely, if a person makes purchases in foreign currency with its cards for US$1,000 during a certain calendar month, it will not be able to purchase FX for saving purposes during the following 5 months).
It is worth mentioning that this regulation does not establish any limits for making purchases with cards in foreign currency, but just limits the FX amount that individuals may purchase for savings purposes.
On the other hand, the Federal Tax Authority (AFIP), through General Resolution 4815/2020, established a new tax withholding regime applicable over transactions that are levied with the Solidarity Tax imposed by the end of 2019.
This means that transactions with cards in foreign currency that already needed to pay a 30% Solidarity Tax, will now suffer an “extra” 35% tax withholding over the net purchase amount.
The withholdings in this case can be deducted from future annual tax reports for income tax or personal assets tax, depending on the tax condition of the affected person.
The withholding agents for this new regime will be the same ones for the Solidarity Tax, including in case of sub-acquirers, aggregators or payment facilitators.
TIC activities declared essential and strategic public services
Opens the door for price fixing
By Decree 690/2020 published last August 22nd, the Information Technology and Communication Services (TICs), including, among others, internet and mobile phone services, were declared essential and strategic public services.
Consequently, the authority must guarantee their availability and, for such purpose, may set prices and establish basic services of universal access.
The Decree also suspended until December 31st, 2020 any increase in prices or new fees announced by suppliers since July 31st, 2020.
Given that fintech and digital banking activities are fundamentally based on internet services and mobile communications, this regulation may have important effects for them.
Refinancing of credit card balances: Control over banks
The Argentine Central Bank will control compliance of refinancing measures
Last August 21st, 2020, the BCRA issued a press announcement, by means of which it informed that, even though no claims have been received by consumers, the Superintendence of Financial and Exchange Entities will initiate an investigation to determine whether banks applied or not the refinancing plans disposed by Government during the COVID-19 pandemic.
As we informed in former reports, through Communication “A” 6964, the BCRA established in the past that financial entities should automatically refinance the credit card balances due during April. This measure then was extended for subsequent periods.
Court precedent against the IT Committee of a local bank
Due to irregularities detected in its internet banking platform
Through resolution dated August 13th, 2020, the Federal Chamber of Administrative Contentious Matters rejected a recourse from HSBC Bank Argentina against BCRA’s Resolution 134/2019 that had sanctioned the bank and certain members of its IT Committee for certain irregularities detected in the bank’s platform for electronic transfers.
The breach attributed to the bank was the omission of the concept “Salaries” in the transfers menu.
Among other things that were discussed in the process, the Chamber stated that, even when the breach may seem minor, it is embedded in a larger purpose, linked with the necessity to incentivize the use of electronic channels and to give transparency to the transactions performed through them.
Notwithstanding this particular case, it is interesting to see that the BCRA (and courts) have started to be more vigilant about technological applications and electronic channels of banks, setting precedents for the future in this respect.
BCRA’s Debtors Base now includes Electronic Invoices
For open and public consultation
By Communication “C” 88078, dated September 10th, the BCRA enabled that the information about SMEs Electronic Invoices be published within the BCRA’s Debtors Base and be accessible to the general public.
This new feature is an additional support for this new financial instrument, that aims at enhancing the financial sources for SMEs.
Vital Facts Digital Certificate
Another step in the construction of the digital identity system
Last September 3rd, the Federal Government announced the launch of the federal platform for the Digital Certificate of Vital Facts (“CDHV”), which connects the Federal Registry of Persons (RENAPER) with the civil registries of all jurisdictions of the country.
This Certificate will allow, for instance, that retired people and beneficiaries of social plans avoid going to physical agencies of banks to prove their identity or that they are alive.
The CDHV platform will be in pilot format for 90 days and it is assumed that it will benefit about 7 million citizens.
First meeting of the Council for Coordination of Financial Inclusion
A new National Strategy was announced
On September 11th, 2020, the Council for Coordination of Financial Inclusion held its first meeting. The Council is supposed to be the forum of discussion of the national strategy for the financial inclusion of the population, so that every resident in Argentina can have access to banking and financial services.
During the meeting, that was chaired by the Ministry of Economy, it was announced that the Government will publish soon the “new” National Strategy for Financial Inclusion, that will be consistent with the objectives and priorities of the current Administration.
It is worth recalling that the first National Strategy was published last year by the former Government and it aimed at fostering the fintech market, even with open banking initiatives.
The meeting remarked that the main objective of the new National Strategy will be to solve the problems for financial access to vulnerable sectors, with emphasis in low-income population, workers of the popular economy and the elderly.
Rumors about a new regulation
According to informal opinions of the BCRA authorities
During a non-official speech of one of BCRA’s director, Zenón Biagosch, the BCRA seems to be working on new regulations for fintech and e-wallets.
These new regulations would apparently be focused in: (i) corporate governance, (ii) internal controls, and (iii) risk management; with the purpose of ensuring transparency, mainly considering the digitalization boom during the COVID-19 pandemic.
These rules would apparently be addressed to lending companies, PSPs and crypto activities.
So far, no official information has been published, so we will have to wait for further announcements from the regulator in order to know the accuracy and eventual details of this information.
Disputes around Simplified Corporations (SAS) still ongoing
By resolution dated September 16th, 2020, the National Commercial Courts granted a precautionary measure in favor of the Entrepreneurs Association and mandated that all resolutions issued by the Public Registry of Commerce of the City of Buenos Aires that intended to restrict the operation of the Simplified Corporations (SAS) should be suspended until the judicial dispute is finally resolved.
However, few days after, the Federal Administrative Courts ruled against the decision of the Commercial Courts and annulled the referred precautionary measure.
Therefore, the destiny of this corporate vehicle that many start-ups were using for their digital businesses is still uncertain.
Please, do not hesitate to contact us should you require any additional information on this matter.
Sincerely,
Daniel Levi
María Shakespear
Pablo J. Torretta
Luciana Liefeldt
Andrés Schreiber
* This bulletin contains summaries of standards that are published and to which we refer. They are in no way complete or imply legal advice. If you require legal advice, please contact us.