COVID-19 AND ARGENTINA: THE COST OF DOING BUSINESS

Gateway to South America on 06/04/2020 - 20:18 in All categories of countries are, Argentina Lifestyle, Argentina Mendoza, Argentina-General, Argentine farms, Commercial Argentina

Post available in: English

Argentina has adopted a stringent lockdown policy of shelter-in-place, allowing residents to leave their homes only for food, medication, or to work in an essential industry. This effort to “hammer” the contagion and mortality curves of the virus contrast with the more lax policies of its neighbour, Brazil. Which of these approaches proves most prescient is yet to be seen. But, for now, Argentina has elected to place the cost of its ordered lockdown on the private sector. Let us take a quick look.

Presidential Decree No. 329 (April 1)

By government fiat, the Office of the President declared prohibited for 60 days ending May 31: • Employer-imposed furloughs or any unpaid leaves of absence for reasons attributable to economic hardship or force majeure; and• The termination of any employees without cause or for reasons attributable to economic hardship or force majeure. Excepted from the above prohibitions are any paid leaves of absence or agreements to recharacterize wages as “non-remunerative” (thereby lowering payroll taxes) negotiated with the union or, in absence of union representation, with individual employees, so long as either of these arrangements is confirmed by the Ministry of Labor.

Presidential Decree No. 332 (April 2)

The day after declaring furloughs and terminations tied to the COVID-19 lockdown unlawful, the following day the government released Decree No. 332 to create the “Emergency Assistance Program for Jobs and Manufacturing” (the “Program”).

The Program endeavours to assist qualifying businesses affected by the current economic shutdown prompted by the COVID-19 pandemic. As you will see, it is quite limited in scope and should not be confused with any large-scale financial support offered by other national governments. The nuts and bolts of the relief and how to qualify for it are yet to be specified by implementing regulations. Thus, as of today, we do not yet have a clear sense of whether a particular business is able to qualify for relief under the Program. The regulation of this Program has been delegated to the Head of the Executive Cabinet (Jefe de Gabinete de Ministros), who will set the criteria, business sectors, and other specifics to qualify for assistance under the Program.

Who Qualifies Under the Program?

Business meeting any of the following requisites can qualify for Program assistance:
• Their business activity has been “critically affected” in the regions where
conducted.

• The employer has a “significant number” of its workforce infected by the COVID-19 virus, or is subject to the mandatory shelter-in-place order or is excused from work due to membership in a high-risk demographic or being charged with family care obligations due to the virus.

• The company’s sales have been adversely affected after the shelter-in-place order came into effect on March 20. For purposes of satisfying this prong, only results between March 20 and April 3, inclusive, may be considered.
Companies exempted from the lockdown due to their status as a provider of “essential” services or business do not qualify for the Program.

What Are the Program Benefits?

A qualifying business may receive one or more of the following benefits:

A. Deferral or Reduction of Employer Social Security Contributions (Aportes
y contribuciones patronales).
Note: The Federal Tax Authority (entirely separate from the Social Security
Agency) has not, as of today, offered taxpayers postponed filing deadlines, reduced taxes, deferred payment plans, or any other relief whatsoever.

B. Partial Government Funding of Payroll for Employees Subject to a
Collective Bargaining Agreement. For companies with up to 100 employees,
the government will give a “supplemental allowance” (payment) toward each employee’s wages. This allowance varies according to the size of the workforce but is a maximum equal to the current minimum monthly wage (“Salario Mínimo, Vital y Móvil”) of AR$16,875.
Note: This supplemental allowance is reduced by an additional 25% for those businesses that have entered into a confirmed (by the Ministry of Labor) agreement with the union or directly with the employees for a paid leave of absence at reduced wages.

C. Production Recovery Program. For a business having more than 100
employees, the government is offering payment of between AR$6,000 and
AR$10,000 for each employee. The specifics of this benefit have not yet been
defined but are forthcoming from the Ministry of Labor.

Source: Wiener Soto Caparros

The foregoing article is a description of publicly available information and is not intended as legal advice or as a comprehensive analysis of the matters referred to herein.

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