Law 26360, approved in March 2008 and promulgated in April 2008, regulates Argentina’s largest incentive scheme for investments in capital equipment and infrastructure (Regimen de Promocion de Inversiones en Bienes de Capital y Obras de Infraestructura), replacing Law 25924 of September 2004 and Decree 1152/04. In accordance with this programme, the government grants tax breaks worth Ps1.2bn a year to qualifying investment projects. Of this amount, some Ps200m is allocated for small and medium-sized enterprises. Companies can apply for refunds of value-added tax (VAT) on capital-goods purchases or accelerated depreciation (investments in export-related sectors may qualify for both). The Ministry of Economy and Production (Ministerio de Economia y Produccion—MEcon) evaluates the amount of the investment, the number of jobs to be created and the additional exports that the projects may create and then approves or denies the incentive.The sectors that have specifically benefited are transport, generation and distribution of electricity; production, transport and distribution of oil and derivates; mining exploration and exploitation; fluvial, road and rail transportation; and ports. The president’s office reserves the right to include any other sector that complies with the requirement of the law. Projects attempting to gain access to the incentive scheme must prove the existence of an investment project to be started (no less than 15% of planned funds must be invested) between October 2007 and September 2010. Investments started before October 2007 can apply for the benefits if the amount invested before the application is less than 15% of planned investments.Law 25988 of April 2005 and Decree 379/05 provide another set of incentives. The law allows firms that made capital purchases in 2000–04 to be eligible to receive VAT rebates if they could not claim these rebates at the time of purchase. The law serves to remedy mistakes or overlooked rebates that resulted from the numerous changes to VAT rules during this period. To qualify for this VAT refund, investment projects originally had to be implemented within 15 months of the law’s approval, and projects must be at least as large as the rebate being claimed.Purchasers receive a VAT rebate of 5 percentage points when goods and services are purchased via debit cards (the normal VAT rate is 21%). Credit-card purchases receive a rebate of 3 percentage points, but the issuing bank must charge lower interest rates than the ceiling imposed by MEcon. The rebate is not available for payment of household bills and insurance premiums by credit card; fuel and gas purchases also have been excluded since October 2006. The incentive aims to spur consumption and force companies to comply with tax laws, since transactions by debit and credit card are documented. The government extended this incentive in late 2006 for an additional year (Decree 1026/06). Resolution 26/07 extended the tax benefit for debit cards until the end of 2008. The benefit for credit cards was not extended, and expired at end-2007.The Nacional Directory of Financial Assistance (Direccion Nacional de Asistencia Financiera) runs several programmes that grant financial support to small and medium-sized enterprises (SMEs), called pequenas y medianas empresas (PYMEs) in Spanish. Among them are the following:a regime of subsidised interest rates (Law 24467/1995, amended by Law 25300/2000 and Decrees 748/2000, 871/2003 and 159/2005), which subsidises up to 50%, or 8 percentage points, of the interest rate in loans given by local banks participating in the programme, for financing working capital or capital goods purchases;
      FONAPyME, which is a financial trust that provides capital contributions and medium- and long-term loans to SMEs that substitute imports, have a high regional effect and generate new employment; and
      Fomicro, which aims to finance associative or individual productive projects and micro-enterprises involving unemployed or sub-employed persons.Other programmes can be consulted at the web page for PYMEs (www.sepyme.gov.ar).


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