The Argentinian government launched a package of measures to revive the sector of micro, small and medium enterprises (SMEs), some of which must be formalized through the enactment of a law and others will be implemented through regulations or administrative rules.

Here is a summary of the major changes and proposals:

• Deferred payment of Value Added Tax (VAT): SMEs enjoy a deferral on payment of VAT, instead of 30 days they will have 90 days, which gives the company a greater flow of funds and also provides a payment period closer to the average of the market (the business sector does not charge sales usually in cash, which sometimes causes them to pay VAT without having collected it and this implies a financial effort that is mitigated by the measure). This measure will take effect from June 1st, 2016.

• Certificate of not withholding VAT: One issue that afflicts SMEs is the accumulation of credit balance that is generated by suffering withholdings exceeding the final obligation of tax and that despite this situation it is very difficult to meet with the procedure that would allow them to stop being withheld or perceived. Thereafter, 68% of SMEs receive a certificate of VAT withholding automatically; for other companies, the procedure to obtain it will have more flexible requirements.

• Update retention thresholds VAT and income tax: the amounts on which corresponds withholding VAT and income tax were not updated since 2000. The Federal Administration of Public Revenue (AFIP) is working on most resolutions imposing withholding and collection regimes increasing their minimum values or not subject to withholding and collection.

• Subject excluded from the tax on minimum presumed income: SMEs will no longer pay this tax.

• Special deduction in the Income tax: To stimulate reinvestment of profits a deduction of 8% of the investment determined the amount of tax on earnings will be admitted, with a cap of 2% of sales. This means that if 8% of the investment exceeds 2% of sales, the latter follows. It will apply for investments from 07.01.2016 to 12.31.2018, in profit goods. The appeal of the deduction is that new and used goods and works and installations (except cars) are included.

• Installment of Income Taxes: micro and small enterprises may be computed as payment on account the total tax on bank debits and credits (tax check), which now was restricted to a percentage (34% tax on bank credits).