Through the enactment of Law No. 27,570 (Official Gazette 10/7/2020), the long-awaited Knowledge Economy Law passed in 2019 was amended, known as the successor to the Software Promotion Law.
By March 2021, the TAD application became available for new registrations (despite already being in force per its regulations), unlike the re-registration of companies already covered by the Software Promotion Law, who had their opportunity at the end of 2020.
There is no official information published regarding new registrations, but an estimate by the organization www.leydeconocimiento.org.ar reports that approximately 2,500 companies have registered since its inception. Companies that were under the previous regime re-registered almost in their entirety, the same organization reports.
Unlike the Software Promotion Law, which published in the official gazette the companies joining the regime, under the new law only the beneficiary company is informed, via electronic notification to the registered email and in their TAD account. That is why we have no verifiable figures.
How was the re-registration process for those coming from the software law? They had to do it via TAD before 12/31/2020. Failing to do so on time meant the loss of practically two years of tax benefits and the obligation to register from scratch. Re-registered companies enjoy the benefits since January 1, 2020 (retroactively, since the application was delayed for months); new ones, since their registration, no earlier than March 26, 2021.
The current term of the regime, accompanied by its assertion of "fiscal stability", extends until December 31, 2029. We understand that when the time comes it will be extended, as happened with the Software Promotion Law.
New registrations also brought more news: the covered activities were notably expanded. Not only were sectors outside the software industry incorporated, but the universe in IT was also expanded. In software, however, the impossibility of including self-development was added. That is, companies that develop software for themselves are not covered, despite investing and hiring resources that meet the law's objectives. The first knowledge law, approved in 2019, did not exclude self-development.
Resolution 4/2021 (MDP) aims to promote economic activities that apply the use of knowledge and the digitalization of information, supported by advances in science and technology, to obtain goods, provide services and/or improve processes. It also pursues the generation of quality employment, the export of goods and services and, with that, the inflow of foreign currency.
Some of the covered activities are audiovisual production and post-production, biotechnology, geological and prospecting services, services related to electronics and communications, professional services, nanotechnology, aerospace and satellite industry or space technologies. The common denominator is human talent, knowledge, technology and the goods and services derived from production.
Subsection (e) incorporates activities such as advertising, campaign creation, content, institutional communication, graphic/web design, etc., but requires that they be "professional services only to the extent that they are exported". It is a difficult requirement to meet that leaves out many companies in the sector. Various chambers are lobbying to relax the 70% billing-by-export requirement, comparing themselves with audiovisual production, which does not require it.
Admission requirements: the main activity (or the sum of activities) must represent at least 70% of annual billing, determined from AFIP Form 1278. In addition, at least two of the following three requirements must be met: (1) Quality standard, (2) Training or R&D and (3) Export.
The quality standard must have been obtained or its process started within the F 1278 period, demonstrably, according to the law's exhaustive list. Training is measured on the promoted payroll mass of the last year: 1% (micro), 2% (SME) and 5% (large). R&D requires novelty, originality or creativity and is measured on total billing: 1% (micro), 2% (SME) and 5% (large). Training and R&D are mutually exclusive. Export of goods/services derived from promoted activities requires at least 4% (micro), 10% (SME) and 13% (large) of total billing.
Benefits. The most relevant is the tax credit bond to pay national taxes, equivalent to 70% of employer contributions for personnel assigned to promoted activities. The percentage rises to 80% when hiring women and/or dissident persons, persons with postgraduate degrees in engineering, exact or natural sciences, persons with disabilities, residents of unfavorable areas or beneficiaries of social plans. The regime establishes a fiscal cap: official communication NO. 2022-73562673 APN expanded the limits to 25.6 billion.
The second major benefit is the reduction of the income tax rate on promoted activities: 60% for micro and small companies, 40% for medium-sized and 20% for large, applicable to Argentine and foreign source. It applies to fiscal years started after registration.
The regime provides for associated costs (FONPEC contribution of up to 4% of benefits received) and biennial revalidation. The company must comply with its tax, labor, union and social security obligations, and maintain or increase the personnel assigned to promoted activities (auditable annually, with 60 days to replace removed personnel). Beneficiaries who export with respect to promoted activities are not subject to VAT withholdings or perceptions.