By means of Decree 679 (the “Decree“), the National Executive Power created the Régimen de Fomento de Inversiones para Exportaciones de las Actividades de la Economía del Conocimiento (the “Promotion Regime“) for companies that carry out the development of knowledge activities and contribute to increase their exports. For such purpose, the Decree establishes a series of benefits and the requirements applicable to each case.
En primer lugar, el Decreto exceptúa del requisito de ingreso y liquidación obligatoria en el Mercado Libre de Cambios (MLC) a aquellos que realicen una inversión no inferior a USD 3.000.000 (calculada al momento de presentación del proyecto a la autoridad de aplicación), en actividades de economía del conocimiento. Firstly, the Decree exempts from the requirement of mandatory entry and settlement in the Foreign Exchange Market those who make an investment of not less than USD 3,000,000 (calculated at the time of presentation of the project to the application authority), in knowledge economy activities. The unsettled foreign currency up to an amount equivalent to 20% of the foreign currency received as foreign direct investment may be applied to the payment of capital and interests of commercial or financial liabilities abroad and/or profits and dividends corresponding to closed and audited balance sheets and/or to the repatriation of foreign currency of non-residents, as well as to the investments described in the Decree. The foreign currency that receives the benefit must be deposited in a special account in the manner and within the terms established by the application authority and the Central Bank. The term to avail of this benefit through the presentation of the investment plan will be until June 30, 2023. The National Executive Power may extend it until December 31, 2023 when there are justified causes.
The beneficiaries of this Promotion Regime are obliged to comply with the investment plans, in the conditions and terms contemplated in the project(s) approved by the application authority. Completion terms may not exceed twenty-four (24) months as from the realization of the first investment, being authorized to extend such term for up to another twenty-four (24) months.
Secondly, the Decree establishes another benefit for those who are currently registered in the Régimen de Fomento de Inversiones para Exportaciones de las Actividades de la Economía del Conocimiento. They will have access to an amount of free availability of U.S. dollars of 30% of the foreign exchange earned from the net incremental exports made, verified on a quarterly basis, to be applied to the payment of salaries of employees, duly registered in those activities.
Both benefits are independent and are not exclusive of each other.
Finally, the Decree also allows beneficiaries to convert into a tax credit voucher up to seventy percent (70%) of the employer’s contributions effectively paid to the Social Security systems and subsystems with respect to the duly registered employees affected to investments in infrastructure, capital goods and working capital for the start-up of new projects or the expansion of those already existing for the development of activities of the knowledge economy. The tax credit may be used for twenty-four (24) months from its issuance for the cancellation of national taxes (Value Added Tax and other national taxes and their advances, if applicable), excluding income tax. This term may be extended for twelve (12) months for justified causes.
Notwithstanding the foregoing, those beneficiaries who prove exports from their promoted activity or promoted activities may opt that the convertibility benefit of the bond be used for the cancellation of income tax, in a percentage not greater than the percentage of exports reported during their registration or the one updated annually. The tax credit voucher may not be used to cancel debts prior to the effective incorporation of the beneficiary to the regime of the present law and in no case shall any eventual balances in its favor give rise to refunds or reimbursements.
This report cannot be considered as legal or any other type of advice from Allende & Brea.
