Senate Committee Approves Knowledge Economy bill With Amendments, Expects to Debate it on Floor Next Week
25 septiembre 2020
ARGENTINA
On September 23, the Systems and Budget Committees passed a bill modifying the Knowledge Economy Law with amendments, supported by the ruling party Frente de Todos and rejected by opposition Juntos por el Cambio, which asked for text previously passed by the Chamber of Deputies to be approved. It is expected that the text will arrive at the Senate next week.
The modifications made to the articles approved by the Deputies include the following:
- Activities promoted: a more precise definition is given to “professional services, only insofar as they are exports”, and it is established this only refers to legal and accounting services, translation and interpreting services, advertising, design, architectural and engineering services, as well as others, due to the intensive use of qualified human resources, according to the Executive Branch.
- Subjects covered: Legal entities not reaching 70% of the total invoiced last year through the activities promoted may register as long as they are able to prove their development in an intensive way to incorporate scientific advances.
- Registration requirements for “professional services, only insofar as they are exports”: Those requested for large companies will apply.
- Revalidation of registration: Subjects must be able to prove that they are meeting their tax obligations every two years, maintaining or increasing the numbers of staff declared, and continue to meet program requirements.
- Employer contributions: The tax credit bonus will be non-transferable. These bonuses may be used for the cancellation of national taxes. It may not be used to cancel debts prior to the incorporation to the regime.
- Income tax: The beneficiaries will have a reduction of a percentage with respect to the size of the company, being 60% for micro and medium companies, 40% for medium companies and 20% for large companies.
- Sanctions: New fines are envisaged, including suspending benefits during the period of non-compliance. During this period, tax credit vouchers may not be used to pay national taxes. The tax credit voucher may be cancelled if not applied. Parties sanctioned may not sign up for registration in the beneficiary register.
- Expiry of full benefits: if unregistered workers are detected, and if the company is included on the list of the Public Registry of Employers with Labor Sanctions (REPSAL, for its acronym in Spanish).
- Beneficiaries of the Regime for the Promotion of the Software Industry: they must be law abiding taxpayers in order to benefit from the Regime for the Promotion of the Knowledge Economy, which should be reflected in their annual audit reports.