Doing Business In Argentina

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Labor Return to top Argentine workers are among the most highly educated in Latin America. Argentine workers were relatively well paid by international standards prior to the peso devaluation in January 2002. While high inflation following the 2002 devaluation significantly eroded the purchasing power of wages, sustained government-promoted increases in public and private sector nominal wage levels from 2003 have reversed this trend. Wages in dollar terms remain competitive, even taking into account Argentina's relatively high social security charges and other taxes. As of the third quarter of 2007, the unemployment rate was 8.1 percent, down from a 21.5 percent peak in 2002, but this number excludes recipients of government assistance to unemployed heads of households. If those recipients were included, unemployment would be approximately 8.8 percent. According to the Ministry of Labor, about 44 percent of workers 14 years and older work in the informal sector. Organized labor continues to play a strong role in Argentina. Sector-specific negotiations between unions and industry, although largely market-driven, have often been influenced by government suasion on behalf of unions. In the 2002-2004 period, a number of general wage increases were mandated by presidential decree. Argentine law provides unions with the right to negotiate collective bargaining agreements and to have recourse to conciliation and arbitration. The Ministry of Labor, Employment, and Social Security ratifies collective bargaining agreements, which covered roughly 75 percent of the formally employed work force. According to the ILO, the ratification process impeded free collective bargaining because the ministry considered not only whether a collective labor agreement contained clauses violating public order standards but also whether the agreement complied with productivity, investment, technology, and vocational training criteria. However, there were no known cases during the year of government refusal to approve any collective agreements under these criteria. There are no special laws or exemptions from regular labor laws in the foreign trade zones. With the unemployment rate now below nine percent, employers have begun to comment about the increasing tightness in the labor market, especially for some kinds of skilled labor in high demand. The GOA passed a modest labor reform law in 2000 to address rigidities in the labor market (i.e., increasing collective bargaining flexibility, extending trial employment periods, and lowering payroll taxes for new permanent hires). However, the anticipated growth in employment did not materialize, as the reforms coincided with a deepening of the economic recession produced by foreign and domestic factors. Following the acceleration of the financial crisis beginning in December 2001, many workers left the formal labor force and instead began to work informally, as employers sought to avoid high pension, social security, and other taxes on formal employment. In an effort to avoid massive layoffs during the 2002 financial crisis, severance payments were doubled. This "double indemnification" labor termination policy was ended in September 2007 when official unemployment dropped below ten percent. According to the World Bank’s “Doing Business” survey compiled before this double indemnification policy was ended, the cost of terminating an employee in Argentina averaged 139 weeks of wages, almost double the Latin American average of 59 and more than four times the OECD average of 31. 3/4/2008
Foreign-Trade Zones/Free Ports Return to top Argentina has two types of tax-exempt trading areas: Foreign Trade Zones (FTZs), which are found throughout the country; and the more comprehensive Special Customs Area (SCA), which covers all of Tierra del Fuego Province and whose benefits apply only to already established firms. Law 24331 of 1994 establishes the FTZ regime for Argentina. Argentine law defines an FTZ as a territory outside the “general customs area” (GCA, i.e., the rest of Argentina) where neither the inflows nor outflows of exported final merchandise are subject to tariffs, non-tariff barriers, or other taxes on goods. Goods produced within a FTZ generally cannot be shipped to the GCA, unless they are capital goods not produced in the rest of the country. The labor, sanitary, ecological, safety, criminal, and financial regulations within FTZs are the same as those that prevail in the GCA. Foreign firms get national treatment in FTZs. Under the current law, the GOA may create one FTZ per province, with certain exceptions. More than one FTZ per province may be allowed in sparsely populated border regions (although this provision has not been fully utilized). Thus far, the GOA has permitted FTZs in most of the 24 Argentine provinces. The most active FTZ is in La Plata, the capital of Buenos Aires Province. Merchandise shipped from the GCA to a FTZ may receive export incentive benefits, if applicable, only after the goods are exported from the FTZ to a third country destination. Merchandise shipped from the GCA to a FTZ and later exported to another country is not exempt from export taxes. Any value added in FTZs and re-exports from FTZ is exempt from export taxes. Law 19640, passed in 1972, codifies the Special Customs Area (SCA) rules for Argentina. Unlike FTZ-manufactured goods, products manufactured in an SCA may enter the GCA free from taxes or tariffs. In addition, the government may enact special regulations that exempt products shipped through an SCA (but not manufactured therein) from all forms of taxation except excise taxes. The SCA program provides benefits for established companies that meet specific production and employment objectives. The SCA program applies only to Tierra del Fuego Province. The government reduced some SCA benefits in the early 1990s. Some of these benefits were later reestablished, but only for those firms previously established in Tierra del Fuego Province. The SCA program is scheduled to expire at the end of 2013. In late 2006, Economic Ministry Resolution 776 abolished export tax exemption enjoyed by oil companies operating in Tierra del Fuego Province. Foreign Direct Investment Statistics Return to top According to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2007, the total stock of FDI in Argentina at the end of 2006 was estimated at $58.6 billion. Spain, the United States, and France remain the top 3/4/2008
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Doing Business in Argentina: 2008 C
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3/4/2008 Argentina’s banking syst
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3/4/2008 The zero percent import du
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Return to table of contents Chapter
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Policy Short-term Short/Medium Term
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meetings. The service includes at l
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approximately 87 percent of the tot
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more limited and delivery is a grow
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Goods: Preference will be given to
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material, input, or material needed
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terminals at international airports
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As in many countries, personal rela
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"Clarin", "La Nacion", and "Ambito
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Av. de Mayo 605, Piso 3 C1084AAB Bu
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Business Facilitation Service: CS A
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organizations, both Argentine or U.
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available in Chapter 9: Contacts, M
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Agricultural Machinery, Equipment a
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Electric Power Systems Overview Ret
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Food Processing and Packaging Equip
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Information Technology Overview Ret
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Other market conditions will foster
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market. The market has been growing
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Mining Sector Specialist at the U.S
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significantly smaller than in the U
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A gradual recovery has taken place
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Best sales prospects for U.S. elect
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Travel and Tourism Services Overvie
Page 57 and 58: Telecommunications Equipment and Se
Page 59 and 60: Agricultural Sectors Return to top
Page 61 and 62: Food Ingredients Overview Return to
Page 63 and 64: Pioneer Argentina: www.pioneer.com/
Page 65 and 66: Average Tariff Rates by Type of Pro
Page 67 and 68: In 2006, there was a significant in
Page 69 and 70: 3/4/2008 Certain imported goods for
Page 71 and 72: Please note that VAT and Profits Ta
Page 73 and 74: 3/4/2008 Goods covered by Decree 73
Page 75 and 76: A fax of the commercial invoice may
Page 77 and 78: you through this process. You may a
Page 79 and 80: violate export control laws is foun
Page 81 and 82: Initial period: 1 year Extension: 1
Page 83 and 84: Article 6: - Importers, manufacture
Page 85 and 86: emanufactured) and certified by a "
Page 87 and 88: 3/4/2008 Normalizacion) --composed
Page 89 and 90: 3/4/2008 continuing shortage of ind
Page 91 and 92: 3/4/2008 Record No. S01:0116093/200
Page 93 and 94: 3/4/2008 Internet: www.anmat.gov.ar
Page 95 and 96: subject to the orders, guidelines o
Page 97 and 98: In January 2002, the government end
Page 99 and 100: The GOA has established a number of
Page 101 and 102: legality of this pesification decre
Page 103 and 104: deterrent penalties such as prison
Page 105 and 106: Law 17811 of 1968 regulates public
Page 107: A recent ACO investigation of GOA p
Page 111 and 112: Argentine Parliament (www.diputados
Page 113 and 114: Registry of Foreign Investments. Fo
Page 115 and 116: Local bankers report that the major
Page 117 and 118: The International Bank for Reconstr
Page 119 and 120: total project costs for new venture
Page 121 and 122: Return to table of contents Chapter
Page 123 and 124: C1104AC) Buenos Aires, Argentina Ph
Page 125 and 126: Buenos Aires has a large number of
Page 127 and 128: Travelers should note that since Ar
Page 129 and 130: Internet: www.buyusa.gov/argentina/
Page 131 and 132: U.S. Department of Commerce Trade I
Page 133 and 134: (Argentine Chamber of Importers) Mr
Page 135 and 136: (Ministry of Federal Planning, Publ
Page 137 and 138: C1020AC Buenos Aires Switchboard: (
Page 139 and 140: 25 de Mayo 487, primer piso C1002AB
Page 141 and 142: C1036AAJ Buenos Aires Phone: (54-11
Page 143 and 144: Fax: (54-11) 4312-7184 E-mail: mdem
Page 145 and 146: E-mail: fargosi@fibertel.com.ar BAS
Page 147 and 148: Bolivar 332, Piso 6 C1088AAH Buenos
Page 149 and 150: Mr. Klaus Bertram, President 25 de
Page 151 and 152: EXOLGAN TERMINAL PORTUARIA S.A. Mr.
Page 153 and 154: C1006ACI Buenos Aires Phone: (54-11
Page 155 and 156: Fax: (54-11) 4131-3900 E-mail: info
Page 157 and 158: www.starwoodhotels.com/sheraton/pro
Page 159:
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