In March, the Argentine Republic’s Senate and Congress passed a law to support entrepreneurial capital, which began as an initiative of the Deputy Secretary for Entrepreneurs, in the Production Ministry, working with the Argentine Association of Entrepreneurs  [Asociación de Emprendedores de Argentina (ASEA)].

The law defines entrepreneurship as “any activity, for profit or not, carried out in the Argentine Republic by a newly created legal person, or one that was set up no more than seven (7) years ago”. Its purpose is to encourage people with innovative ideas to set up and develop companies and to sidestep two of the major obstacles facing those who want to begin an enterprise: bureaucratic barriers and lack of financial support.

New company structure and reduction of administrative delays

A new legal figure, Simplified Companies, SAS, in the Spanish acronym [Sociedades por Acciones Simplificadas]) will make it easier to open, promote and expand small companies, which will be able to do the following:

• Set up a Single Tax Code (Clave Única de Identificación Tributaria, CUIT or CDI) in 24 hours
• Open a bank account quickly and easily, by simply presenting the company’s articles of association and proof that it has a CUIT
• Only one partner required
• Minimum equity equivalent to 2 times the minimum living and mobility wage (two basic wages)
• Issue shares with the same rights at different prices
• Use digital signature, accounting books and proxies

Tax benefits

Capital investments made by investors in companies in this category can be deducted from the taxable earnings base. This deduction will be equivalent to 75% or 85% (for some under-developed areas and with less access to financing) of the investment made, with a ceiling of 10% of net earnings from that tax year, or the amount proportionate to the months since activities began in that tax year.

These advantages will be applied provided the total investment is kept in the company for at least 2 years, counting from the first tax year in which the investment was made.

National Fund for Entrepreneurial Capital

Under the provisions of this law, a Trust Fund for the Development of Entrepreneurial Capital (FONDCE) will be set up to finance enterprises in conjunction with the private sector. Its advisory board will be made up of representatives from the country’s provinces and key institutions supporting entrepreneurs, and will develop financing programmes for entrepreneurs nationwide, such as the Seed Fund [Fondo Semilla], incubators, accelerators and enterprise capital investment funds, supporting both for-profit entrepreneurs and those whose main aim is a social impact, including cooperatives.

FONDCE’s equity will be sourced from:

• Resources allocated through the national government’s general budget and other laws
• Revenue from legacies and donations
• Funds provided by national, provincial, international and NGO bodies
• Funds that can be generated or released as a result of applying FONDCE programmes and pursuing its goals
• Unearned income and the gains from these assets
• Funds from IPO placements of negotiable securities issued by the FONDCE on capital markets
• Funds from public and private firms, both Argentinian and foreign, wishing to support the development of the country’s entrepreneurial capital

Crowdfunding

Crowdfunding platforms have been regulated so that part of a project’s shares can be offered online and publicly, and so that small investors can take part in their initial phases; all this is supervised by the National Securities Commission.

Seed Fund programme

The law provides for zero-interest loans which will empower and finance those entrepreneurs who want to set up a project or take an existing start-up to the next level. The following will be assessed before offering these loans:

• Innovation potential
• How much support a particular province or region is receiving
• Whether the diversity of the Argentine Republic’s productive sectors is being represented
• Job creation
• Value creation

The regulations to the law will be devised by the Ministry for Production, together with teams from the Finance Ministry, the Federal Administration of Public Revenues, the General Justice Inspectorate, the central bank and the National Securities Commission.