In June 2024, a crucial law known as Law 5920, officially named “Foundations and Starting Points for the Freedom of Argentinians,” was passed in Argentina. Commonly referred to as the “Bases Law,” this law is designed to make significant improvements in different areas of the country’s economy and public administration. As a resident of Argentina, it’s important to get to know the main aspects of this law and how it could influence your daily activities and business ventures.
Key Economic and Administrative Changes
Declaration of Public Emergency
Law 5920(ley 5920 precio) announces a public emergency related to financial, energy, administrative, and economic issues for a period of one year. This emergency status gives the executive branch certain powers to address these matters. The aim is to promote more transparency in government operations, enhance the effectiveness of services, lessen administrative complexity, and secure internal controls.
New Investment Incentive Program
The law launches the Incentive Regime for Large Investments (RIGI). This program provides a variety of rewards and incentives for vehicles dedicated to single projects, striving to draw considerable investments into Argentina. By doing so, it hopes to boost economic activity and growth throughout the nation.
Changes Affecting Labor Law
Registration and Payment for Employees
With Law 5920, the rules around registering employees have been streamlined. Now, this process has become electronic and instantaneous. Companies hiring 12 or more staff will only need to pay a single amount covering all legal responsibilities for labor and social security. This total will be distributed by the collecting agency to each relevant party.
Extended Probationary Period
The probationary period for new employees is now extended to six months. In certain cases, it can also go as follows: For businesses with 6 to 100 employees, the probation can last up to 8 months, while for smaller firms with up to 5 employees, it can go up to one year. During this initial time frame, either the worker or employer can terminate the employment without the need for severance pay. However, the same person cannot be put on probation more than once, and misusing this rule could lead to penalties.
Changes to Maternity Leave
Law 5920 has also revised the rules around maternity leave. Now, mothers must take at least 10 days of leave prior to giving birth and the remaining 80 days afterward.
Grounds for Dismissal and Severance
New legal grounds for fair dismissal have been introduced, including participation in workplace disruptions. Severance payments for unjust dismissals have increased significantly, with potential compensations up to 100% more than regular amounts for discriminatory terminations.
Flexibility for Independent Workers
Freelancers can now work with up to three independent contractors without forming formal employee relationships, providing more adaptable options for those running small businesses or working as freelancers.
Tax Changes and Amnesty Provision
Tax Amnesty Opportunities
The law includes a tax amnesty provision that applies to both Argentine residents and those living abroad with assets in the country. This feature allows people to declare previously unreported assets, such as cash, properties, shares, and cryptocurrencies. The tax amnesty adopts a tiered rate of 5%, 10%, and 15%, with special offers for individuals who adhere to the rules.
International Tax Coordination
Law 5920 also aligns Argentina’s financial rules with global tax regulations, implementing guidelines from the OECD concerning base erosion and profit shifting. Such alignment seeks to counteract tax evasion and enhances Argentina’s credibility within the global tax arena.
Adjustments in Foreign Trade and Customs Regulations
Changing Rules for Import and Export
This law removes the necessity for importers and exporters to register in a specific state registry. This modification allows individuals to manage their import and export transactions directly, avoiding the need for middlemen.
Pre-Arrival Customs Instructions
The law permits the declaration of goods meant for import before they physically arrive, aiming to make the importation process easier and reduce bottlenecks at customs.
No-Imposition of Trade Restrictions
Under Law 5920, the government is restricted from imposing export or import bans due to economic issues, including a ban on quotas, thereby cultivating a less obstructive and more competitive trade environment.
Financial System Overhaul and Currency Reforms
While the specifics regarding currency exchange aren’t detailed extensively, Law 5920 likely introduces measures intended to deregulate the foreign exchange market, aiming to lessen the constraints associated with currency transactions. Such adjustments might transform how Argentines manage buying, selling, and storing foreign currencies.
Implementation Plan and Timeline
The Executive Branch will be in charge of announcing and publishing Law 5920 in the Official Gazette. Various aspects of this law will come into effect according to set timelines, which may vary for different sections of the law.
What This Means for Argentine Citizens
New Paths for Business Development
The reforms from Law 5920 bring fresh chances for business owners and entrepreneurs. The simplified employee registration, extended probationary timelines, and relaxed rules for independent contractors create a more favorable landscape for launching and expanding businesses across Argentina.
Protection for Workers
Though the law increases flexibility in employment arrangements, it simultaneously establishes measures to safeguard employee rights against discrimination and exploitation. Workers should be informed about their entitlements in relation to the revised probation terms and severance circumstances.
Handling Tax Matters
The introduction of the tax amnesty offers a pathway for Argentine residents to tidy up their tax statuses without the fear of severe penalties. It’s essential to seek advice from tax specialists for guidance on how to take part in this program correctly.
Opportunities in Global Trade
The loosening of regulations concerning imports and exports might open doors for Argentine individuals to get involved in international trade, either on their own or through smaller businesses.
Financial Decision-Making
The developments in the financial landscape and upcoming currency exchange reforms could influence how citizens manage their finances, investments, and savings. Staying updated on these changes and discussing plans with financial advisors is recommended for navigating these evolving circumstances.
Wrapping It Up
Law 5920 marks a major transformation in Argentina’s economic and regulatory scene. For citizens, gaining a clear understanding of how these modifications can impact both personal and work life is essential. While the law aims for prosperity, efficiency, and compatibility with global standards, it also brings certain complications that might require professional assistance for effective navigation.
As the implementation of Law 5920 unfolds, it’s vital to keep up with any updated guidelines or additional rules released by government authorities. Consulting with legal, tax, and financial experts is crucial to ensure compliance and insight into the new opportunities at hand.
By embracing the changes that come with Law 5920, Argentine citizens can better position themselves to flourish in the changing economic landscape, ultimately playing a role in the advancement and growth of their country in the years ahead.
