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Muddy Waters for Payments of Imports Of Goods

Moye White has been a part of Ally Law for over 15 years. This membership allows us to access and collaborate with more than 70 firms across the globe to provide our clients with local intelligence with a global breadth. In 2022, we are partnering with fellow Ally Law member firms around the world for our International Insights blog series. Every other month, one of our Ally Law partner firms will share insights and tips for doing business in their home country.

Our next guest blog is written by Richards Cardinal Tützer Zabala Zaefferer (RCTZZ) attorneys in Buenos Aires, Argentina. The firm specializes in a diverse range of high-quality corporate and business legal advice, including Competition Law, White-Collar Crime, Mergers and Acquisitions, Construction, Tax, and more. RCTZZ works with local and multinational companies to deliver practical, creative, and timely solutions through a skilled and experienced team of attorneys.

- Paul Franke, President of Ally Law


By Hernán D. Camarero (Partner) and Eduardo Bellocq (Senior Associate) of Richards Cardinal Tützer Zabala Zaefferer

Due to the almost full depletion of its foreign currency reserves and the inability to meet external debt commitments at maturity, the Argentine Government, mainly through the Central Bank of Argentina ("CBA"), has put in practice a myriad of progressively complex regulations to restrict local importers from the access to the local foreign exchange market ("FX Market") to purchase foreign currency to satisfy their obligations with their counterparts.

The restrictions are manifold and operate as layers of hurdles that an importer must solve out to pay for imports of goods; furthermore, they are amended by the CBA constantly (sometimes with implicit retroactive effects), interfering with importers’ commercial understandings with their external suppliers. For example, in June 2022, payments of imports of goods practically stalled due to a very stringent and fuzzy CBA communication1. It is worth noting that any infringement to foreign exchange regulations is punished by the foreign exchange criminal regime and fines up to 10 times the amount of the infringing transaction (Law Nr. 19,359 as amended).

As indicated, the layers of hurdles that an importer must successfully jump to pay for an import of goods are:

  1. Imp/Exp Forecast: Filing to the National Secretariat of Trade of an imports/exports report for the last year vs. a forecast for the coming year. This is a random request without legal grounds. On a discretionary basis, the Secretariat would inform the importer the maximum amount of foreign currency that it may purchase to pay for imports.
  2. NAL/AL: The importer must electronically upload an import deed to the Federal Public Income Agency’s (“AFIP”) Comprehensive Imports Oversight System (SIMI) and request the issuance of a “SIMI” certificate. Depending on the good’s tariff position, importer should handle an automatic or nonautomatic license (“AL” and “NAL,” respectively) before the Argentine tax authority (AFIP). Until all intervening governmental agencies approve such import deed and SIMI, AFIP shall not issue a SIMI in “exit status.2
  3. FEC Test: AFIP General Resolution 4294/2018 ordered every importer to check online beforehand for AFIP’s assessment about its compliance with tax obligations and its financial and economic capacity (“FEC”) to purchase foreign currency to make a foreign exchange transaction. FEC is based on an undisclosed formula that considers certain taxpayers’ information (tax returns, mortgages, real estate, vehicles, usable goods, etc.). FEC amount functions as a cap to purchase foreign currency. Upon the importers’ request, FEC may be reviewed only once monthly.
  4. Additionally, CBA foreign exchange regulations (“FX Regs”) set two specific quotas for importers that must be satisfied jointly, that result from a series of complex calculations, as follows:

(i) SIMI Quota: After AFIP awards a SIMI with “exit status,” CBA may assign one of three SIMI categories: type A, B or C, depending on the imported good’s tariff position and whether it is subject to an AL or NAL. CBA chooses the type of SIMI, based on certain importer’s information it has (which is not disclosed to anyone). CBA shall assign the type that it deems suitable, which may not be the one requested by the importer. Each type of SIMI is regulated differently by the FX Regs.

CBA fixes a yearly quota that importers should calculate to check if they may access the FX Market to pay for an import and sets forth when they may access thereto (Section 10.14., FX Regs). Once such quota is used, the importer may not make more payments abroad during such year, unless at least a 180-day term elapses since the date of customs clearance of the good imported (i.e., the foreign supplier must accept to ship the good and wait for such term – plus the manufacturing and shipping timing – to get paid)3.

The SIMI Quota may not be recouped. Upon its depletion, the importer may access the FX Market only after the waiting period has elapsed.

The 2022 SIMI A quota shall be equivalent to the lesser amount of (a) FOB value of imports in 2021 plus 5% thereof, or (b) FOB value of imports of 2020, plus 70% thereof. If importer made no imports in the last two years, the 2022 SIMI A quota shall be USD 50,000, or the lesser amount resulting from this calculation4. The 2022 SIMI C quota shall be the amount resulting from the difference between 2022 quota SIMI A and the higher amount in (a) or (b).

But importers may not use the SIMI quota at once. The SIMI quota amount accrues and vests in proportion at the beginning of each month of the relevant year5.

Upon access to the FX Market, the importer must declare that it complies with the SIMI A quota. The CBA checks the SIMI A quota when the SIMI category is awarded and then when the payment is requested6.

(ii) Imports General Quota: until December 31, 2022, payments of imports require prior CBA approval (that it never grants), unless importer represents in an affidavit that the total amount of payments of imports of goods7 as from January 1, 2020, does not exceed USD 250,000, the amount resulting from the following formula:

  • Amount of foreign currency the importer would be allowed to purchase in the FX Market for imports of goods cleared through customs since January 1, 2020 (certain exclusions apply), including the payment it wants to make (e.g., USD 1 million).

+

  • Total amount of payments since July 6, 2020, for goods imported by courier and other specific goods (offshore platforms, duty-free shops and certain customs-free deposits) or shipped after July 1, 2022 (e.g., USD 0).

+

  • Payments of foreign trade debt financing (and other payments – e.g., medicines by courier, COVID-related goods, certificate of exports increase, certificate of inflow of foreign financial indebtedness) (e.g., USD 0).

-

  • Total amounts paid between September 1 and December 31, 2019, for imports of goods pending customs entry (e.g., USD 300,000).

So: USD 1 million – USD 300,000 = USD 700,000, plus USD 250,000 = USD 950,000

Then, the importer’s quota is USD 950,000. Nevertheless, it should be matched with the SIMI quota, because the lesser one sets the maximum amount the importer may pay abroad8.

Several exceptions are included to the general quota (e.g., COVID-related goods, capital goods and trade debt under certain conditions, medicines or other goods related to medical care, at sight payments or trade debt for goods not cleared in customs that are used to produce goods locally, subject to certain conditions, etc.).

This quota – as opposed to the SIMI one – may be recouped for the value of an import if importer clears the goods through customs, e.g., if it agreed to defer its payment. 

All calculations must match with the information and records that the CBA has for the relevant importer. This information is not disclosed.

In practice, if the financial entity informs the importer that the CBA does not grant access to the FX Market due to insufficient quota, it is not possible to know the CBA’s calculation and the importer will not be able to pay for imports. CBA implemented a so-called “traffic light” IT system with the financial entities: red means request for payment rejected; yellow, some conditions must be met to clear payment; green, request for payment cleared.

Considering the foregoing, specialized legal advice is a must when importers located in Argentina should deal with FX Regs to avoid delays in their performance and, worse, infringements to the foreign exchange criminal regime.

All in all, FX controls are in Argentina to stay, at least until the next presidential elections in October 2023.


1 We refer to Communication "A" 7532 of the CBA. Even local financial institutions were puzzled by its application leading them to halt their foreign exchange operations until the CBA sort of clarified it.
Only a SIMI with exit status allows the importer to move ahead in the path to the FX Market. AFIP may not issue a SIMI. There were several judicial cases filed by importers, pleading for an injunction to get such “exit status”, with various outcomes.
However, there are some exceptions to such general terms: (i) fertilizers and/or plant protection products and/or raw materials for their local manufacture (60 days); (ii) certain goods (paper, plastic, rubber) (90 days); (iii) deferred payment of external trade debt (approximately 255/265 days).
4 If 2021 imports do not exceed USD 1 million, the annual SIMI A quota shall be equivalent to 115% of the FOB value of the 2021 imports. If such FOB value is higher than USD 1 million but lower than USD 1.15 million, such quota will be the largest figure between USD 1.15 million and the amount resulting from the general calculation of the SIMI quota.
If the amount is less than USD 250,000, this amount is taken or the corresponding yearly quota, if lower.
6 A false affidavit violates FX Regs and the Foreign Exchange Criminal Regime. Failure to sign the affidavit entails the duty to ask for CBA prior authorization, which, in practice, never grants.
7 These include advanced, at sight and deferred payments, trade debt, capital goods, etc.
8 The calculation is complex, aggravated by the fact that the importer does not know what kind of information the CBA has, to assess its available quota. Furthermore, dynamics of foreign trade require it should be updated permanently.

ABOUT THE AUTHOR

Moye White