On 15th August 2017, the government department for Entrepreneurs and Small & Medium Enterprises (SEPyME) published Resolution 340-E/2017 updating the criteria defining SMEs, setting out a single, clear definition for both general and the special categories.

Quantitative limits: total annual sales revenues by sector

The first classification under this regulation for whether an enterprise is recognised as a micro, small or medium sized company is a financial threshold that varies depending on the company’s activity (agriculture, industry and mining, trade, services, construction).

Total annual sales revenues must not exceed the sums specified in Appendix I of the regulation; total annual sales will be understood as the average over the last three tax years, excluding taxes that may apply, and bearing in mind that up to 50% can be deducted from export sales.

Should the company not have been operating for three years, total annual sales revenues will be calculated by taking the average from the tax year just ended. In the absence of such information, a proportional ratio will be calculated on the basis of accumulated monthly sales to date.

The regulation establishes the following brackets of annual sales for a company to be considered micro, small or medium:

• Micro enterprise:

Agricultural, ARS 3 million; Industry & mining, 10.5 million; Trade, 12.5 million; Services, 3.5 million and Construction, 4.7 million.

• Small enterprise:

Agricultural, 19 million; Industry and Mining, 64 million; Trade, 75 million; Services, 21 million and Construction, 30 million.

• Medium (T1)

Agricultural, 145 million; Industry and Mining, 520 million; Trade, 630 million; Services, 175 million and Construction, 240 million.

• Medium (T2)

Agricultural, 230 million; Industry and Mining, 760 million; Trade, 900 million; Services, 250 million and Construction, 360 million.

Specific provisions for quantitative thresholds:

If its business is conducted in more than one of the sectors listed, the enterprise must be categorised in the business sector with the highest sales as per the brackets above. In addition, it must be borne in mind that if annual sales in any one of the enterprise’s activity sectors exceeds the thresholds described above, the enterprise can no longer be considered a micro, small or medium enterprise.

Enterprises registered in the Federal Administration of Public Revenues (AFIP)

A limit of ARS 100 million is applied to those enterprises whose principal activity, as registered in the AFIP, is related to financial intermediation, insurance services and real-estate services.

Included and excluded activities

It also determines which activities should be included or excluded from the scope of the regulation.

Thus, it lists the activities by the sector to which the enterprise belongs. It recognises the agriculture, industry & mining, services, construction and trade sectors, expressly including the following activities: crop farming, stockbreeding, hunting, fishing, mining exploitation, manufacturing industry, information and communications (this with some restrictions), electricity, gas, water supply and waste management, transport and accommodation services, financial intermediation, real estate and professional services, administrative services, teaching and healthcare.

However, it excludes domestic services supplied to private households, the services of extraterritorial organisations and bodies, the Civil Service, Defence and social security from those activities that are subject to the regulation, as well as services relating to gambling and betting.

Controlled and/or related enterprises

Enterprises which, whilst complying with the thresholds in terms of their volumes and sectors of business, nevertheless control, are controlled by and/or have a link with other domestic or foreign companies that do not meet the stated conditions, will not be considered as micro, small or medium sized companies.

The regulation defines a related enterprise as one which has a stake of at least 20% in the capital of another, and a controlled company as one in which another firm owns at least 50%.

Procedure

Enterprises must submit a sworn statement providing the information requested in the corresponding form and if the response from the government department is favourable, the firm will be filed at the MSME Company Registry and be issued a certificate of accreditation as a micro, small or medium enterprise.