On March 28, the Argentine Congress approved the new “Entrepreneurs’ Law," with broad consensus among all political forces with parliamentary representation.
The Law on Entrepreneurs promotes business registration in 24 hours, as well as tax incentives for investment in entrepreneurial ventures, early-stage loans and other mechanisms to support new business creation.
The Ministry of Production, which led the effort to get the law passed, summarized the benefits of new legal framework as follows:
The possibility of starting a business in one day
The law creates a new type of business entity called the “simplified shares company” (Sociedad por Acciones Simplificadas “S.A.S.”), which entrepreneurs can register and manage via the internet from anywhere in the country.
SAS entities will be able to immediately open a simplified bank account, and benefit from the digitalization of signatures, corporate books and powers of attorney, as well as incorporate one or more shareholders and issue shares of the same right at different prices.
Until now, opening a company in the country requires an average of 45 to 60 days, which raises the costs of opening a business significantly, and favors the informal economy. As such, the new framework presents an opportunity for self a-employed taxpayer, for those currently doing business in the informal sector, and more generally, for all those new companies that are created annually in the country.
More entrepreneurial financing
To develop the entrepreneurial capital industry, the law provides tax benefits for registered investors who are committed to the development of Argentine ideas.
Furthermore, in order to facilitate and streamline the financing process for entrepreneurs, the law creates a National Trust Fund for Entrepreneurial Capital (FONDCE).
Via this trust fund, the government can invest together with the private sector, as a way to generate incentives for investors in high-impact projects. The FONDCE will be composed of 10 funds, 40 percent of which will represent public investment. The funds will be of a minimum of $30 million each and will be ran by private fund managers who select the projects.
In addition, the new calls for licensing for four years a total 13 accelerators (three of them with a scientific base) for them to be able to receive financial support to cover operational costs as well as co-investment in local entrepreneurial projects.
At the same time, the law provides for crowdfunding regulation mechanisms to democratize and extend the possibility of Argentinians investing in local talent nation-wide.
Credit at no cost for early stage projects
Also as part of the FONDCE framework, the government will give 0 percent loans for entrepreneurs who are just taking their business projects off the ground.
The government announced that regulating the law is in the hands of the Ministry of Production, which will coordinate efforts with the Ministry of the Economy, the Federal Administration of Public Funds (AFIP), the Inspector General’s Office, the Central Bank, and the National Securities Commission.
The Entrepreneurship Development Program (PRODEM) is proud to have received recognition from the Argentine Senate for our collaboration in this policy achivement, as PRODEM supported the legislation along its champions at the National Secretariat for SMEs and Entrepreneurs within the Ministry of Production, like Startup Nations members Mariano Mayer and Esteban Campero. Signed by Senator Roberto Basualdo, the official letter of recognition specifically highlights our institution’s contribution to the understanding of the phenomenon of entrepreneurship.
Note: A version of this article was published in Spanish on PRODEM’s Blog: http://www.prodem.ungs.edu.ar/blog/2017/04/argentina-se-aprobo-la-ley-de-emprendedores.