Capital Controls in Argentina: Relevant Updates on Payments of Imports of Goods

Pursuant to Communication "A" 6818 dated October 28, 2019, the Argentine Central Bank updated the foreign exchange regulations applicable to payments of imports and other purchases of goods. The new regulatory framework introduces relevant improvements, such us the regulation of import financings, which until now were not specifically contemplated in the regulation, and the reimplementation of the SEPAIMPO, a monitoring regime of payments of imports.

Below are the key takeaways of the new regime:

  1. General Provisions

The general rule is that Argentine importers may access to the local foreign exchange market to make payments of imports of goods and other purchases of goods, subject to certain conditions provided in the regulation (for further detail, see points 3 and 4 below). The payment includes any concept that is part of the purchase condition registered in the invoice issued by the foreign supplier.

Payments of imports of goods are divided in two types: (i) payments of imports that have customs clearance and (ii) payments of imports with customs clearance pending. In both cases, the access to the foreign exchange market includes the payment of commercial debt incurred to finance such imports of goods, including, among others: (a) financing provided by the foreign supplier, (b) financing provided by a foreign export credit agency, and (c) financing provided by a local or foreign financial entity where disbursements are used, net of costs and expenses, to pay to the foreign supplier directly.

The regulation of import financing is a positive aspect of the new regime. Until now, the foreign exchange regulations did not distinguish between financial indebtedness and commercial indebtedness, and the direct application of the disbursement to pay the exporter was not allowed. From now on, disbursements of import financings may be used to pay to the foreign supplier directly, and the requirement to repatriate and convert the loan to Pesos will not be applicable, as it occurs with financial indebtedness.

  1. Tracking System of Payments of Imports (“SEPAIMPO”)

The SEPAIMPO is a system implemented by the Argentine Central Bank to track the payments of imports, as well as to monitor the nationalization of the goods associated with advance payments of imports. For each import, the importer shall appoint a financial institution as monitoring entity. The monitoring entity shall verify the conditions to make payments and track the nationalization of the goods associated with an advance payment.

  1. Payments of Imports with Customs Clearance

The importers may purchase foreign currency in the local exchange market for the payment of imports with customs clearance registered in the SEPAIMPO, as long as the monitoring entity verifies the following requirements, among others:

  1. Proof of customs clearance, copy of the invoice, copy of the shipping document, and verifies that the beneficiary of the payment is the foreign supplier or the financial institution or export credit agency that financed the purchase.
  2. The sale of foreign currency is made against debit to a local account of the importer.
  3. The payment is not made before the due date of the obligation. Prepayments require prior approval by the Argentine Central Bank.
  1. Payment of Imports with Customs Clearance Pending

4.1. Advance Payments

The monitoring entity may grant access to the foreign exchange market for advance payments, provided that the following requirements are met, among others:

  1. Receives documentation to determine the existence of the purchase and the requirement of advance payment prior to the date of delivery of the goods.
  2. The beneficiary of the payment is the foreign supplier.
  3. The sale of foreign currency is made against debit to a local account of the importer.
  4. Receives an affidavit from the client in which it undertakes to obtain customs clearance of the goods within 90 calendar days from the date of payment, or to repatriate and convert the payment to Pesos within such period. Prior Argentine Central Bank approval shall be obtained for advance payments to affiliates or if longer periods are required.
  5. The amount to be paid is reasonable.
  6. The client has not defaulted previous advance payments.

4.2. Payment at Sight against Shipping Documents

The monitoring entity may grant access to the foreign exchange market for payments at sight, provided that the following requirements are met, among others:

  1. Receives copy of the invoice.
  2. Receives copy of the shipping documents.
  3. Receives documentation setting forth the obligation to pay at sight against the presentation of shipping documentation.
  4. The beneficiary of the payment is the foreign supplier, the foreign financial entity or the official credit agency that financed the advance payment to the exporter.
  5. The sale of foreign currency is made against debit to a local account of the importer.
  6. Receives an affidavit from the client in which it undertakes to obtain customs clearance of the goods within 90 calendar days from the date of payment, or to repatriate and convert the funds to Pesos within such period.

For more information, do not hesitate to contact Marcelo R. Tavarone, Federico Salim, Julieta De Ruggiero or Francisco Molina Portela.


Province of Chubut’s Series XL Treasury Notes Issuance for AR$ 500,000,000

 

Legal counsel to Banco del Chubut S.A., as arranger, placement and financial agent, in the issuance of Province of Chubut’s AR$ 500,000,000 fixed rate Series XL Treasury Notes due 2019 (the “Treasury Notes”), under the Province of Chubut’s Treasury Notes Issuance Programme, secured by certain rights of the Province of Chubut to receive amounts under the federal tax coparticipation regime.

DLA Piper Argentina counseled the Province of Chubut, as issuer of the Treasury Notes under the transaction.


Argentine Central Bank Tightens Capital Controls

In order to preserve the international reserves, the Argentine Central Bank implemented new restrictions on the purchase of foreign currency. It did so through Communication "A" 6815 dated October 28, 2019.

Below are the key takeaways of the new restrictions:

  • Creation of External Assets: The limit for the creation of external assets by individuals is reduced from US$ 10,000 to US$ 200 per calendar month. The transaction must be carried out with debit to an account in a local financial institution of the client, admitting the use of cash up to US$ 100 per month. These limits are not cumulative and include all transactions already performed in October. According to point 1.4 of Communication "A" 6776 and the press release issued by the Argentine Central Bank on October 28, 2018, we understand that credit cards are not subject to this limit.
  • Debit Card Cash Withdrawals: Withdrawals of foreign currency outside Argentina using local debit cards may only be made against deposits in foreign currency in local financial institutions.
  • Import Advances: Importers may access the foreign exchange market for the payment of import advances to non-affiliates. Customs clearance shall be obtained within the following 90 days. Prior Argentine Central Bank approval shall be obtained if the supplier is an affiliate of the importer. Note that, prior to this new regulation, advance payments were allowed, provided that customs clearance was obtained within the following 180 days, without any distinction between affiliates and non-affiliates.
  • New Information Regime for Transactions Over US$ 2,000,000: Financial institutions and exchange agencies shall report to the Argentine Central Bank on a daily basis of the foreign exchange transactions to be carried out in the following three (3) business days for amounts higher than US$ 2,000,000. In this regard, clients requesting such transactions shall inform their financial institution or exchange agency the proposed transactions with reasonable anticipation. On the day of the transaction, the client may use a different entity.
  • Non-residents: The limit to purchase foreign currency by non-residents, originally set at US$ 1,000, is reduced to US$ 100 per calendar month. Payments by ANSES (National Social Security Agency) to beneficiaries of old age pensions are exempt from that limit.

For more information, do not hesitate to contact Marcelo R. Tavarone, Federico Salim, Julieta De Ruggiero or Francisco Molina Portela.


Pablo Tarantino and Agustín Griffi join Tavarone, Rovelli, Salim & Miani as partners of the Mergers and Acquisitions and General Corporate Department

Pablo Tarantino and Agustín Griffi have joined Tavarone, Rovelli, Salim & Miani as partners. In this way, the Firm continues with the expansion and growth of its Mergers and Acquisitions and General Corporate Practice with a team of more than 20 lawyers working full-time in this practice group. The Firm reaffirms its commitment to expansion and once again invests in what has been its main distinctive feature: a young and talented team of lawyers led by partners highly committed to both clients and their team.

Pablo Tarantino is a lawyer specialized in corporate law, area in which he has 15 years of experience. He graduated from the School of Law of the University of Buenos Aires (2004). He began his career at Remaggi, Pico, Jessen & Associates in 2004. He has assisted clients in general corporate law, mergers and acquisitions, as well as in the design of corporate structures for the consummation of domestic and international business. In 2007 he joined Grupo Werthein as Senior Legal Counsel.

Agustín Griffi is a lawyer specialized in corporate law, area in which he has almost 15 years of experience. He graduated from Torcuato Di Tella University School of Law (2005) and obtained an LL.M. degree in corporate and financial law from Fordham University in New York (magna cum laude, 2012). During his career, Agustín distinguished himself in well-known law firms, having worked for 10 years at Bruchou, Fernández Madero & Lombardi. In 2008, he worked as a foreign lawyer at Barbosa, Müssnich & Aragão (Rio de Janeiro) and in 2012 as an international visiting attorney at Dechert LLP (New York). He has assisted clients in general corporate law, mergers and acquisitions, as well as in the design of corporate structures for the conduct of business in Argentina and abroad. In the last 6 years he served as Senior Legal Counsel of Grupo Werthein.

Both lawyers join the Firm after leading the in-house legal team of Grupo Werthein, the Argentine private family holding that totally or partially owns, among others, the following Companies: Experta Seguros (P&C, workers’ compensation and retirement insurance), La Estrella Seguros de Retiro, Gregorio, Numo y Noel Werthein (agribusiness company), Cachamai (food, mass consumption), Transportadora de Gas del Sur S.A., Bodega Riglos-Huarpe (vineyards) and Fideicomiso Buenos Aires Landmark (the successful bidder of the "Tiro Federal" auction designed for its real estate development). Pablo and Agustín will continue advising Grupo Werthein and its subsidiaries in all aspects of corporate law.

In joining Tavarone, Rovelli, Salim & Miani, together with partners Juan Pablo Bove, Federico Otero and Julian Razumny, Pablo and Agustin will contribute to the development and expansion of the M&A and Corporate Practice, an area in which the Firm has experienced remarkable growth, increasing its share in mergers and acquisitions deals, as well as further expanding the client base to which the Firm renders corporate legal advice.

Tavarone, Rovelli, Salim & Miani is proud to have Pablo and Agustin among its members, as they will strengthen the Firm and contribute to keep it as one of the most active in our legal market.