Top 10 Challenges Of Doing Business In Argentina

Published date23 October 2021
Subject MatterTax, Tax Authorities
Law FirmTMF Group BV
AuthorTMF Group

Argentina's economy boomed in 2017, making it Latin America's third-largest market. Since then, the country has faced periods of financial crisis; its economy shrank by nearly 10% in 2020 due to the Covid pandemic, for example. If you are thinking of expanding your business and moving into Argentina, we recommend that you enlist local help, in order to seamlessly navigate its diverse and complicated landscape.

The key drivers of complexity in Argentina are constant legislative changes, difficulty sending and receiving foreign currency, and high levels of inflation. However, the government has recently introduced a series of economic reforms to promote new trade agreements and optimise the flow of trade. Argentina ranks 7th in TMF Group's Global Business Complexity Index 2021- ranking 77 jurisdictions for the complexity of their business environments - which is an improvement from 3rd in 2020, suggesting the reforms are already having a positive effect.

Due to the Covid pandemic, the government introduced a series of legislative changes. One such change is the inability to dismiss underperforming employees, meaning that Argentinians have had total job security throughout the pandemic. While positive for workers, this has added significant complexity for businesses operating in the jurisdiction, as employees must leave a company of their own volition, or else the business can face massive penalties.

For those operating in Argentina, it can be challenging to send and receive money to or from abroad, as there are regulations in place that severely limit international transfers. Any money that can be transferred, to pay off import invoices, for example, requires rigorous documentation, adding significant complexity for foreign businesses looking to incorporate and operate there.

Argentina is also facing issues with inflation, with the current rate sitting at over 50%. This is an important risk factor causing uncertainty for foreign businesses that are considering incorporating and operating in the country.

Here are ten factors to consider when doing business in Argentina:

1. Starting a business

The World Bank Doing Business 2020 report ranked Argentina 126th for 'ease of doing business'. To start a business in Argentina, 12 procedures are required, taking 11.5 days on average.

2. Dealing with construction permits

Dealing with construction permits is by far the most complicated and time-consuming aspect of doing business in Argentina. On average, the process...

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