Doing business in Argentina
Costs for conducting business in Argentina are low. The average monthly cost for labour, cost of electricity, office or warehouse space is low, while dealing with construction permits has been made easier by streamlining procedures in tandem with implementing an electronic platform for building permit applications.
The process of enforcing contracts, meanwhile, has been simplified by allowing electronic payment of court fees. But international businesses still face a number of bureaucratic hurdles, Arnaldo points out. The process of setting up a new entity was simpler and less time-consuming under previous regimes, although there are hopes among Argentina’s business community that the political class is starting to recognise the benefits of removing red tape and simplifying the tax system.
Access to finance is also very challenging at present, Arnaldo says, due to the high rate of inflation. Argentina has attractive double taxation treaties, bilateral investment agreements, and tax information exchange agreements with a number of countries.
In addition to the high tax burden, Argentina’s central bank has placed limits on the dividends that can be repatriated by international investors. “If you are not already established in the country, this can add an extra complication,” Arnaldo says.
“After the parliamentary elections of November 2021 and a presidential election in 2023, it is hoped that these will see us make some progress to a more business-friendly climate,” he adds. “The long-term outlook may be more optimistic, depending on what happens in these elections.”
At the moment, these challenges mean international businesses are increasingly looking to buy Argentinian companies in order to enter the market. “In particular, they are entering into partnerships with local firms so they can understand the business culture here: domestic entities can be expected to have a better grasp of the market’s particularities, so this is an approach that is very much worth considering.”