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Promotion of the Knowledge-Based economy in Argentina: a new regime and incentives for this thriving field of the industry. Part one

by | Jun 15, 2019 | Companies, Doing business in Argentina, Technology

Promotion of the Knowledge-Based economy in Argentina: a new regime and incentives for this thriving field of the industry. Part one

By Law No. 27,506, published in the Official Gazette on June 10, 2019, the national government established the Promotion of the Knowledge-Based Economy Regime with the goal of promoting economic activities that apply the use of knowledge and the digitalization of information, supported by breakthroughs in science and technology, to obtaining goods, providing services and/or improving processes (article 1).

The Promotion of the Knowledge-Based Economy Regime replaces the current Software Industry Promotion Regime of Law Nº 25,922 as of January 1, 2020, and effective until December 31, 2029.

In the successive analyzes that we will make on the subject, we will explain the core issues of the Promotion of the Knowledge-Based Economy Regime and its articulation with the existing Software Industry Promotion Regime, awaiting for the future regulation of the Promotion of the Knowledge-Based Economy Regime that will implement the specifics.

In this first installment, we will cover the activities and fields covered by the Promotion of the Knowledge-Based Economy Regime (hereinafter the PKER).

1. Activities included and promoted fields

The PKER, in its article 2, makes an extensive listing of the activities included and fields promoted, subject to the detail the regulation will make about the scope of the activities and fields.

a) Activities included

According to article 2, the PKER includes the following activities:

(i) “… creation, design, development, production and implementation or adaptation of products and services and their associated technical documentation, both in its basic and applied aspects, including that which is prepared to be incorporated into processors and/or other technological devices … “; and

(ii) “… engineering, exact and natural sciences, agricultural sciences and medical sciences related to research and experimental development tasks”.

The scope of the PKER is much broader than software and ICTs (information and communication technologies) and extends to fields not strictly related to technology.

b) Promoted fields

As to fields, the PKER promotes:

a) Software and computer and digital services, including:

(i) Development of software products and services (SAAS), existing or to be created in the future, applying to activities such as e-learning, interactive marketing, e-commerce, application providing services, electronic edition and publication of information; as long as they are part of an integrated IT offer and add value to it;

(ii) Development and fine-tuning of original software products that may be registered as an unpublished or edited work;

(iii) Implementation and fine-tuning for third parties of proprietary software products or those created by third parties, and of registered products;

(iv) Customized software development when this activity allows for the distinction of the created added value, even though in the relevant contracts the intellectual property is assigned to third parties;

(v) Value-added computer services aimed at improving the security of equipment and networks, the reliability of software programs and systems, the quality of systems and data, and the management of the information and knowledge of the organizations;

(vi) Development of parts of systems, modules, routines, procedures, documentation, provided that they complement or integrate software products that may be registered;

(vii) Services of design, coding, implementation, maintenance, remote support, resolution of incidents, conversion and/or translation of computer languages, addition of functions, preparation of user documentation and guarantee or quality advice on systems, among others, all of them to be made to software products destined to external markets;

(viii) Development and fine-tuning of software that is designed to be incorporated into processors (inserted or embedded software) used in goods and systems of various kinds;

(ix) Video games; and

(x) Cloud-computing services;

b) Audiovisual production and postproduction, including those of digital format;

c) Biotechnology, bio-economy, biology, biochemistry, microbiology, bioinformatics, molecular biology, neurotechnology and genetic engineering, geoengineering and their testing and analysis;

d) Geological and prospecting services and services related to electronics and communications;

e) Professional services, only to the extent that they are for export;

f) Nanotechnology and nanoscience;

g) Aerospace and satellite industry, space technologies;

h) Engineering for the nuclear industry; and

i) Manufacturing, fine-tuning, maintenance and introduction of goods and services oriented to automation solutions in production that include feedback cycles from physical to digital processes and vice versa, being at all times, exclusively characterized by the use of industry 4.0 technologies, such as artificial intelligence, robotics and industrial internet, internet of things, sensors, additive manufacturing, augmented and virtual reality.

The RPEC far exceeds the current Software Industry Promotion Regime, not only in terms of the activities covered and fields promoted but also the benefits, all of which, in addition, may be extended by the National Executive Branch incorporating new activities and fields according to the new emerging technologies (final paragraph of article 2).

For the Spanish version of this publication, please visit http://cspabogados.com.ar/economia-del-conocimiento .

 

Mario E. Castro Sammartino

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