Doing business in Argentina
As the second-largest country in Latin America, Argentina has emerged as an attractive marketplace for global investors. However, the country has a history of high inflation, currency devaluation and political instability, which can add to the risks of doing business there. Companies looking to expand into Argentina must build up a thorough understanding of the economic landscape and the country’s evolving regulatory environment.
Argentina, officially the Argentine Republic, is Latin America’s third-largest economy. The country comprises a federation of 23 provinces as well as the autonomous city of Buenos Aires.
Argentinians have a good quality of life, resulting in a ‘very high’ rating on the Human Development Index. The country actively pursues strong international relations and is a prominent member of several international trade associations, including MERCOSUR (Southern Common Market), G20 and the Cairns Group.
It also benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector and an increasingly diversified industrial base.
Fast Facts
- In 2023, Argentina had a GDP of US$1.013 trillion [World Economics].
- Currency – Argentine Peso (Sign: $; Code: ARS).
- Language – Spanish, although other languages – including English, Italian, and French – are widely spoken.
- Type of government – presidential representative democratic republic.
- GNI per capita – US$11,590 in 2022; a 16.13% increase from 2021 [Macrotrends.net].
- Population – 46 million [Worldometer, April 2024].
- Country capital – Buenos Aires.
- Key sectors: manufacturing, real estate, agribusiness, pharmaceuticals, automobiles, energy and resources and biotechnology.
- Key cities: Buenos Aires, Rosario, Córdoba, Mendoza, Bariloche, Salta, Ushuaia.
While there are many benefits associated with doing business in Argentina, there are also certain challenges to negotiate, as the country is ranked 10th in the world for the complexity of its business environment in TMF Group’s Global Business Complexity Index 2023.
There are a number of economic and political factors in play that impact business conditions. Argentina has a history of high inflation, currency devaluation and political instability, all of which increase investment risk.
It’s important that companies doing business in Argentina therefore take the time to build up a thorough understanding of the economic landscape and its evolving regulatory environment.
Advantages to doing business in Argentina
There are many advantages to doing business in Argentina. As the second-largest country in Latin America, it has emerged as an attractive marketplace for global investors. It’s a complex market, but one that is full of opportunities for foreign companies.
Investors can tap into a local consumer market that has just hit 46 million people as well as the huge potential in the lithium, oil, mining, renewable energy and agrobusiness sectors. Many of the biggest multinational companies in the world now have a growing presence in Argentina, as the country continues to grow its vast range of industries.
Argentina has signed free trade agreements with several countries as well as certain international organisations. Through MERCOSUR, for example, it has free access to trade with its Latin American neighbours including Brazil, Paraguay and Uruguay, enjoying limited taxes and minimum legal requirements.
In recent years, Argentina’s government has also approved a number of key initiatives to encourage foreign investment. These include the Agencia Argentina de Inversiones y Comercial Internacional, which provides free assistance to foreigners interested in doing businesses in the country, and the Argentine Simplified Share Company (SAS), a legal entity that makes it easier for foreigners to set up businesses in Argentina.
A key tip for doing business in Argentina is to harness the country’s highly educated workforce. Although Argentina’s official language is Spanish, other languages commonly spoken include English, Italian, French and Portuguese.
Argentina also offers a high quality of life when it comes to factors such as education, natural environment and health services. Buenos Aires, the capital city, came second in Mercer’s Quality of Living City Rankings 2023.
When it comes to the best places for doing business in Argentina, Buenos Aires has an excellent business infrastructure and offers ambitious entrepreneurs a wealth of opportunities. In recent years, the city has seen significant investment in aerospace technology and the renewable energy sector.
Córdoba, Argentina's second most populated city, is another important business hub and a favoured location for many of the country’s startups.
Doing business in Argentina: the culture
When first entering the market, it’s crucial that companies carefully consider the impact of culture on business processes in Argentina.
Argentinian business culture values trust, honour and familiarity. The business environment is relationship-driven, so it’s important for investors to spend time building networks and cultivating friendships. Flexibility and punctuality are also qualities that are highly valued.
Business structures tend to be hierarchical, with decisions made at the top of the company. Processes can therefore sometimes move slowly due to the need for several layers of approval. The purpose of meetings is more to exchange ideas and discuss them in depth, rather than to make decisions.
When meeting someone for the first time, locals will appreciate any efforts to speak Spanish, but may quickly suggest switching to another language, given the multilingual nature of Argentinian business culture. It’s common to hold business dinners in restaurants, but such meals are primarily for socialising and building relationships, so it’s best to avoid discussing the specifics of a deal unless your Argentinian colleague brings it up first.
Challenges of doing business in Argentina
Doing business in Argentina can be complex for foreign investors for several reasons. For example, incorporation can be quite cumbersome and slow due to the requirement for multiple points of interaction with the authorities.
Further complexity has arisen in recent years as the high rates of inflation continue to increase. Argentina has historically faced hyperinflation, but the current economic volatility and cost of living pressures in the global market has further compounded this issue.
The government’s INDEC statistics agency reported that the country registered an annual inflation rate of 211.4% in 2023, the highest in 32 years.
As a result, companies must adjust salaries several times each year. Updating the payroll, contracts and other employee documentation can be time-consuming and costly, impacting the ease of doing business in Argentina.
In addition, over the last 20 years, Argentina has issued foreign exchange regulations restricting the transfer of funds abroad. Limitations have typically been broadened or narrowed down according to the evolving macroeconomic scenarios and they play an important role when structuring investments.
Despite the complexity that inflation causes, Argentina is working hard to become more self-sufficient with fuel and has plans to increase exports in the near future. It’s likely that the global demand for fuel caused by geopolitical conflicts will boost the country’s economy as it steps in to fill the gaps.
Taxes and regulations
Paying taxes can be a complicated process in Argentina, though working with a local partner can help smooth the process. For example, since Argentina does not have a tax treaty with the US, it’s important for US expatriates to understand and take full advantage of any tax breaks that apply to their personal financial situation.
The Corporate Income Tax (CIT) rate currently stands at 25%. According to the Federal Administration of Public Revenue, it averaged 33.5% from 1997 until 2022, reaching an all-time high of 35% in 1999 before dropping to a record low of 25% in 2021.
The standard VAT rate is 21%, but certain transactions are subject to a reduced 10.5% rate whilst others are liable for an increased 27% rate. The 27% rate applies to ‘utilities services’, such as sewerage and energy.
Argentina has adopted IFRS for all companies whose securities are publicly traded, except for financial and insurance entities, which must apply accounting standards issued by the regulators.
Business rules and regulations in Argentina change regularly, which can drive complexity for companies that need to constantly adapt to new ways of working.
As of April 2024, Argentina’s President, Javier Milei, is seeking to implement a sweeping economic reform bill known as the ‘Omnibus Bill’, which, amongst other issues, seeks to privatise state entities and scale back environmental protections in a bid to boost the economy.
The country typically takes a traditional approach to supporting workers, which positively protects employees but can create difficulties for businesses that must meet certain stringent requirements.
HR and payroll
Labour laws in Argentina are constituted in the Argentine Constitution, international treaties and conventions, and – in most cases – by the country’s Labour Contract Law (Law No. 20,744).
The rights and interests of workers in Argentina are also covered by the Labour Risk Law and collective bargaining agreements between labour and management.
To learn more about Argentina’s labour laws and compliance requirements, read our article highlighting the key issues around payroll compliance.
Starting a business in Argentina
The most common types of business entities used in Argentina are corporations, limited liability companies, simplified share companies (SAS), and branches of a foreign entity.
Foreign companies setting up in Argentina must register with the Public Registry of Commerce (Registro Público de Comercio) and the General Inspection of Justice (Inspección General de Justicia, ‘IGJ’) to participate as shareholders of a local company (Section 123 of the Companies Act) or to establish a branch (Section 118 of the Companies Act).
TMF Argentina has a strong, multilingual team specialising in both local and global requirements for accounting, legal, tax, HR and payroll. Established in 2005, our Buenos Aires office works with business of all sizes who wish to set up or expand their business operations in Argentina.
FAQs
Yes. There are a number of advantages to doing business in Argentina. As the second-largest country in Latin America, Argentina has emerged as an attractive marketplace for global investors.
The country has a highly educated, multilingual workforce and a consumer market of 46 million people. It also has vast potential in the lithium, oil, mining, renewable energy, and agrobusiness sectors. Many of the biggest multinational companies in the world now have a growing presence in Argentina.
Argentina has signed free trade agreements with several countries as well as international organisations. Through MERCOSUR, for example, Argentina has free access to trade with its Latin American neighbours including Brazil, Paraguay, and Uruguay, enjoying limited taxes and minimum legal requirements.
Argentinian business culture values trust, honour and familiarity. The business environment is relationship-driven, so it is important to spend time building networks and cultivating friendships. Flexibility and punctuality are also qualities that are highly valued in a business setting.
When meeting someone for the first time, locals will appreciate any effort at speaking Spanish, but they may quickly suggest switching to another language given the multilingual nature of the Argentinian business culture. It is common to hold business dinners in restaurants, but such meals are primarily for socialising and building relationships, so you should avoid discussing the specifics of business unless your Argentinian colleague brings it up first.
Whilst there are many benefits associated with doing business in Argentina, there are also some challenges to negotiate, as the country was ranked the 10th most complex jurisdiction in which to do business in TMF Group’s Global Business Complexity Index 2023.
Argentina is increasingly recognised for its vast array of industries, but agriculture is the main produce sector. Thanks to its extensive base of natural resources, multiple climate zones and fertile lands, the country is especially well known for its production of soybeans, wheat, maize, sorghum and livestock.
In recent years, greater opportunities in a wider variety of sectors have opened up, attracting international experts with specific skills. These include manufacturing, telecommunications, oil and gas, automotive, petrochemicals, agrichemicals, pharmaceuticals and renewable energy.
Doing business in Argentina can be complex for foreign companies for a range of reasons. For instance, incorporation can be quite ponderous and slow due to a need for multiple points of interaction with authorities.
Further complexity has arisen in recent years due to very high rates of inflation in the country. Argentina has historically faced hyperinflation but the current economic volatility and cost of living pressures in the global market has further compounded this issue.
Argentina generally restricts or prohibits the import of remanufactured goods, such as remanufactured automotive parts, medical equipment and information and communications technology products.
The country also limits entry points for several types of goods, including sensitive goods that are specified via 20 harmonised tariff schedule chapters, through specialised customs procedures.
Find out more about doing business in Argentina
Download our definitive guide to doing business in Argentina. Download now.
