Argentina is the second biggest economy in South America, and there are currently more than 100 UK companies operating out there, ranging from SMEs to FTSE 100 companies such as BT, HSBC and Unilever.
If you’re thinking of doing business in South America, here’s everything you need to know about exporting to Argentina…
The pros and cons of exporting to Argentina
In 2014, Argentina was the UK’s fourth largest export market in South America, with export of goods were worth £289 million, but this has fallen recently due to import restrictions and the slowdown in the Argentine economy.
The strengths of the Argentinian economy include…
- major world producer of agricultural commodities
- unexploited shale oil and gas reserves
- large reserves of minerals and precious metals
- second largest manufacturing capability in South America
- sophisticated market with European tastes and business culture
- direct daily flights with the UK
- only a 3 hour time difference with the UK (4 hours during summer)
- double taxation agreement with the UK
But exporting to Argentina is not without its challenges though, and you’ll have to be mindful of…
- complex import restrictions
- restrictions on access to foreign currency and sending money overseas from Argentina
- high inflation, possibly 35% by end of 2014
- low growth and possible recession in 2014
- no access to international capital markets
- disagreements over UK sovereignty of the Falkland Islands
And it’s worth knowing that the top 10 UK exports to Argentina are…
- medical equipment and pharmaceuticals
- non ferrous metals
- road vehicles
- petroleum and petroleum based products
- power generating machinery
- general industrial machinery
- specialised machinery
- professional and scientific instruments
- inorganic chemicals
- chemical materials and products
And don’t forget, if you’re going to do business in Argentina, you’ll need a reliable and cost effective conference call provider – here’s how to set up a conference call between the UK and Argentina.
Tax and customs in Argentina
If you’re looking to do business in Argentina, open a ubsidiary or an exporting service, it’s best to seek professional advice as tax laws are complex and prone to change.
Some payments may be withheld in lieu of taxes when exporting goods. You can usually deduct this from tax liabilities in the UK. And the UK has a double taxation agreement with Argentina, which means some taxes paid in one country to be deducted in the other.
Argentine Customs use the Harmonised System (HS) for classification of goods. Import duties are based on the Cost, Insurance and Freight (CIF) value.
The Argentine Import Monitoring System (or SIMI, to give it its Spanish acronym) divides all customs codes into 2 categories:
- Automatic import licences
- Non-automatic licences.
Unless there are issues around ‘dumping’, it’s expected most licences will be granted, and following are now excluded from the requirement of non-automatic licences:
- commercial samples
- goods imported under diplomatic franchises
- imports duty paid from the Tierra del Fuego special Economic Area
- imports via courier and postal system if deemed to be for personal use
There is also informal quota system for some products such as cars and other vehicles.
There are restrictions on access to foreign currency to pay imports and your representative in Argentina must get approval from the tax authorities first.