TAX NEWS - 2010

Argentina tax: Tax Incentives proposed for software industry and export of professional and technical services

Argentina's Executive Power has been working on legislation to favorably amend the promotional regime applicable to the software industry and, separately, to promote the export of professional and technical services.


Software regime

The Executive Power has submitted a bill to Congress that would extend and improve the promotional regime applicable to the software industry. The tax benefits currently available under the regime, which apply until September 2014, include:

- A 60% reduction of the income tax due with respect to promoted activities (including the creation, design, implementation, development, production and final check of software systems, as well as technical documents related thereto);

- A fiscal credit bond of up to 70% of certain social security contributions paid that can be used to offset taxes other than the income tax; and

- Fiscal stability for federal taxes, meaning that the direct tax burden cannot be modified once a company is included in the regime.

The proposal would extend benefits under the software promotion regime until 31 December 2019 and allow taxpayers to use the fiscal credit to pay income tax that arises from the export of software.


Export of professional and technical services

The Minister of Industry and Tourism announced in May 2010 that the Executive Power is analyzing a draft bill to create a regime that would include tax incentives in respect of the exportation of professional and technical services. The proposed regime is designed to promote, among others, accounting and administrative services, engineering services, consulting services and IT support services.

Proposed benefits include a tax credit for foreign withholding tax on income (currently limited to certain cases) and the creation of a fiscal credit bond for expenses incurred for training personnel.

The government is also reviewing other incentives related to the export of services, which may be included in the same bill.