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New Foreign Exchange Regulations in Argentina

by | Sep 14, 2019

New Foreign Exchange Regulations in Argentina

The Argentine Executive Power, by means of the Urgency and Necessity Decree No. 609/2009, established new foreign exchange regulations in Argentina controlling certain aspects of the inflows, outflows, purchase of foreign currency and other transactions as of 1 September 2019. These regulations have been complemented and extended by additional regulations issued by the Central Bank of the Argentine Republic (Banco Central de la República Argentina, or BCRA after its Spanish acronym).

Among the most significant provisions we find the following:

1. Export proceeds

The foreign currency proceeds from the export of goods and services must be transferred into and /or sold in the foreign exchange market. This measure will stand until 31 December 2019 (Decree No. 609/2009, Section 1).

Pursuant to the Communication “A” 6770 of the BCRA, as amended by Communication “A” 6776:

a) Export of goods

(i) The pending foreign currency collections from export of goods related to boarding permissions formalized before 2 September 2019, as well as the new advance payments and export pre-financings, must be transferred into and sold for Argentine Pesos in the foreign exchange market within 5 business days as of the date of the collection or of the disbursement in the country or abroad (Communication “A” 6770, point 2); and

(ii) The foreign currency collections from export of goods related to boarding permissions formalized as of 2 September 2019, must be transferred into and sold for Argentine Pesos in the foreign exchange market within certain maximum terms, ranging from 15 to 180 calendar days, depending on the goods exported and the affiliations between the exporter and the importer[1]. These terms shall start as of the date of the shipment´s certificate (cumplido de embarque) of the export destination granted by Argentine Customs (Communication “A” 6766, point 1.1.1).

Irrespective of said maximum terms, the export collections must be transferred into and sold for Argentine Pesos within 5 business days as of the date of the collection (Communication “A” 6770, point 1, final paragraph).

The export proceeds may be used, in certain limited cases, to cancel advance payments and pre-export financings (Communication “A” 6770, point 3).

b) Export of services

The foreign currency collections from export of services must be transferred into and sold for Argentine Pesos in the foreign exchange market within 5 business days as of the date of the collection in the country or abroad or their credit to foreign accounts (Communication “A” 6770, point 4).

2. Purchase of foreign currency

The purchase of foreign currency and precious metals (coins) in the foreign exchange market and its transfer abroad will have the following restrictions:

a) Individuals

(i) Resident individuals need prior authorization by the BCRA to access the foreign exchange market to create external assets, family aid, and granting of any kind of guarantees in relation to derivatives transactions, in all cases when exceeding USD 10,000 a month in the aggregate of institutions authorized to operate in the foreign exchange markets and for all the said purposes. When exceeding USD 1,000, transactions may not be executed in cash but through debit to local banking accounts (Communication “A” 6770, point 6).

 (ii) Non-resident individuals have a monthly cap of USD 1,000 to access the foreign exchange market to purchase foreign currency in the aggregate of institutions authorized to operate in the foreign exchange, with certain numbered exceptions such as transactions made by international organizations and institutions with the role of official export credit agencies (Communication “A” 6770, point 7, and Communication “A” 6776, point 1.2).

There are no restrictions for resident individuals to transfer foreign currency from their local foreign-currency-denominated accounts to their own accounts abroad (Communication “A” 6776, point 1.6.1.).

b) Legal entities and others

Legal entities, mutual funds, trusts, etc. will always need prior approval by the BCRA to access the foreign exchange market, to create external assets and grant any kind of guarantees related to the instrumentation of derivative transactions ((Communication “A” 6770, point 5.).

3. Foreign financial indebtedness

Proceeds from foreign financial debts incurred as of 1 September 2019 must be transferred into and sold for pesos in the foreign exchange. This foreign currency settlement must be shown when accessing the foreign exchange markets to repay interest and capital (Communication “A” 6770, point 8).

BCRA´s authorization will be required to access the foreign exchange markets to pay foreign financial indebtedness with more than 3 business days in advance to maturity (Communication “A” 6770, point 11).

4. Foreign currency debts

It is forbidden to access the foreign exchange market to repay debts in foreign currency agreed upon between residents as of 1 September 2019 (Communication “A” 6770, point 9), with the exception of financings granted by local financial institutions, including payments for purchases made with credit cards in foreign currency (Communication “A” 6776, point 1.4).

Access to the foreign exchange market is allowed to pay out debts contracted out before 1 September 2019 as long as they are implemented by means of public registries or deeds (Communication “A” 6770, point 9).

Financings in foreign currency granted by local financial institutions to clients from the private non-financial sector must be sold for pesos in the foreign exchange market upon disbursement (Communication “A” 6776, point 2)

5. Profits ands dividends

The BCRA´s authorization will be required to access the foreign exchange markets to purchase foreign currency and pay profits and dividends abroad (Communication “A” 6770, point 10).

6. Imports of goods and services

Importers of goods and services will have to request the BCRA´s authorization:

a) To prepay debts (Communication “A” 6770, point 12)[2]; and

b) To pay overdue or on demand debts for imports of goods with foreign affiliated companies when exceeding USD 2 million per month per resident client (Communication “A” 6770, point 13).

7. Payment of services with affiliated companies

Prior BCRA´s authorization will be required for the payment of services to affiliated parties abroad, with some exceptions such as credit card issuers for transfers made for tourism and trips (Communication “A” 6770, point 14).

8. Reporting regime on foreign assets and liabilities

To access the foreign exchange market to pay foreign financial and commercial debts, the interested party must submit evidence that the relevant transaction has been reported in the latest expired presentation of the reporting regime on foreign assets and liabilities established by the BCRA´s Communication “A” 6401 ( Communication “A” 6770, point 19).

9. Criminal Exchange Regime

Any infringement to the foreign exchange regulations may result in indictments, and penalties of fines and prison terms.

 

[1]The definition of affiliation between companies is that contained in the BCRA´s regulation on large exposures to credit risks (Communication “A” 6599, as amended, point 1.2.2.) (Communication “A” 6776, point 1.7).

[2]Submitting supporting documentation, showing evidence of the entry of good through customs within 180 business days as of the access to the foreign exchange market, and making payment in favor of the foreign supplier.

Mario E. Castro Sammartino

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Our publications exclusively express the author´s opinion and do not purport to be legal counsel on any case. Should you need it, you must consult with your trusted lawyer.

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