Productive Recovery Program – Benefits for Medium and Small Companies (PyMES)
On September 18, 2016 Law 27.264 establishing the Productive Recovery Program was regulated through Decree 1101/2016. Such program aims, specifically, to the Micro, Small, and Medium Companies (MiPyMES as abbreviated in Spanish). To qualify as a MiPyME a company needs to remain within the annual sales amounts established by Resolution 11/2016 issued by the Secretary of Development and Small and Medium Company.

The program established a special tax treatment for MiPyMES including, among other benefits, the following ones: (i) waiver on the Minimum Presumed Income Tax as of January 1, 2017; (ii) credit of 100% of the amounts paid under the Banking Credits and Debits Tax towards the Income Tax for micro and small companies, such percentage shall be of 50% for the medium companies; and (iii) deferral of Value Added Tax payment for a 90-day period for micro and small companies.

Likewise, Law 27.264 created an Investment Promotion Regime applicable to MiPyMES for those productive investments performed in capital goods or infrastructure developments. Such regime shall have a term of 30 months, starting on July 1, 2016 until December 31, 2018.

During the term of the Investment Promotion Regime, the MiPyMES will have the opportunity to benefit from a tax stability regime, meaning that the total tax burden, considered separately in each jurisdiction, shall not be increased. It is important to remark that the specific adhesion by the different provinces will be required for the full enforceability of this benefit.

The benefits established through the Investment Promotion Regime shall expire if the beneficiary company reduces its employees’ payroll in more than 5%, without considering those employees that retire, resign or die. The benefits will also expire if the goods or works which originated them where transferred by the beneficiary company, unless they are replaced under the conditions established by the regulations and at least one third of its useful life had ended.

In addition, those MiPyMES that perform productive investments as established by the regulations, will be entitled, under certain conditions, to use a portion of the investment’s cost (10%) towards payment of the Income Tax.

Finally, the MiPyMES will have the opportunity to request that the Value Added Tax fiscal credit that may have originated by productive investments as established by the Investment Promotion Regime, be converted into a nontransferable tax credit bond to be used, with some limitations, to pay for national taxes.