Foreign direct investment (FDI) and long term foreign financing play a key role in terms of technology, modernization, and competitiveness in the economy, in particular, when it is aimed at improving export capacity.
In the current context, the BCRA manages the forex market with a view to making the balance of payments sustainable. Moreover, as foreign exchange stability conditions improve, regulations will be reviewed.
The measures adopted by the BCRA have contributed to improving the conditions to access the forex market for the repatriation of direct investments, and the transfer of profits and dividends.
Thus, non-residents’ investment repatriation1 is allowed where:
- it takes place two years, as a minimum, after the capital contribution was transferred and settled in the forex market as from October 2020.
- it takes place as from the second year of investments within the framework of the “Plan for the Promotion of the Argentine Natural Gas Production.”
- exporters of industrialized and extractive goods achieved an increase in their external sales over 2021 vis-à-vis 2020—repatriation being subject to a percentage of the increase on the goods exported;2
In addition, one year after the transfer of the capital contribution into the forex market, FDI exporting companies are authorized to use their export proceeds to repatriate non-residents' investments3 where:
- exporters allocated the contribution to finance completed projects that increased the production of goods for export or for import substitution, or that increased transport capacity for exports of goods and services by building infrastructure facilities at ports, airports and land terminals for international transportation; or
- the contribution transferred was equal to USD100 million or over for activities under the “Investment Promotion Regime for Exports,” subject to limits regarding the foreign currency proceeds from exports related to the project and the gross amount of the foreign currency transferred.4
As regards the transfer of profits and dividends,5 companies may access the forex market to make payments of up to 30% of the accumulated amount of direct investment contributions transferred into the forex market since January 2020.
Moreover, companies may access the forex market for the transfer of profits and dividends on investments under the “Plan for the Promotion of the Argentine Natural Gas Production,” the same as exporters of industrialized and extractive goods with foreign sale annual increases recorded in 2021.
In these cases, the conditions to access the market are comparable to those set out for the repatriation of non-residents' investments. The proceeds from exports of goods may be directly used for the transfer of profits and dividends, subject to certain limits, for projects in the “Investment Promotion Regime for Exports.”
References
1. Paragraph 3.13 of the Regulations on Foreign Trade and Exchange.
2. Paragraph 3.18 of the Regulations on Foreign Trade and Exchange.
3. Paragraph 7.9 of the Regulations on Foreign Trade and Exchange.
4. Paragraph 7.10 of the Regulations on Foreign Trade and Exchange.
5. Paragraph 3.4 of the Regulations on Foreign Trade and Exchange.
