Published legislation and draft legislation - Argentina

Defining MSME categories

Circular OPRAC 1-912

In its Circular OPRAC 1-912, Argentina’s central bank (BCRA) has reviewed its definitions of micro, small and medium-sized companies, adapting the regulations covering the different categories.

The modification to point 1 came into force on 20th September, affecting “Attributes for consideration” in the text of the regulations for “Determining the category of micro, small or medium-sized companies”, dated 26th July 2016. Clauses 11 and 12, on the classification of MSMEs and issues affecting affiliation and control, were changed.

Definition

The Circular specifies that the presentation of the accreditation certificate should be taken into consideration and raises the upper thresholds by sector, aspects that are covered in Resolution 340-2017 issued by the Department of Entrepreneurs, Small & Medium Companies, in the Ministry of Production, as discussed in issue 12 of Progreso.

  1. Presentation of the certificate accrediting the condition of micro, small or medium-sized company: the certificate referred to in the above Resolution will have to be presented in order to establish a company’s category.
  2. Average value of total annual sales: the regulation specifies the monetary limits by sector set out in Resolution 340/2017. Annual total sales should not exceed the amounts specified in point 1.1.2 of the regulation –which coincide with those in Appendix I of the same resolution-. The limits for each SME category, using the Economic Activities Classification (CLAE) are as follows:
  • Micro enterprise: Agriculture, ARS 3 million; Industry & Mining, ARS 10.5 million; Trade, ARS 12.5 million; Services, ARS 3.5 million; and Construction, ARS 4.7 million.
  • Small enterprise: Agriculture, ARS 19 million; Industry & Mining, ARS 64 million; Trade, ARS 75 million; Services, ARS 21 million; and Construction, ARS 30 million.
  • Medium (T1): Agriculture, ARS 145 million; Industry & Mining, ARS 520 million; Trade, ARS 630 million; Services, ARS 175 million; and Construction, ARS 240 million.
  • Medium (T2): Agriculture, ARS 230 million; Industry & Mining, ARS 760 million; Trade, ARS 900 million; Services, ARS 250 million and Construction, ARS 360 million.

The Circular specifies that total annual sales will be understood as the average pre-tax sales from the previous three financial years, with an exemption of up to 50% on exports. However, on this final point, it introduces some qualifiers:

  • If the enterprise is under three years old, total annual sales will be calculated by pro rating information from the tax period completed; in its absence, the completed monthly tax periods will be used.
  • If an enterprise has sales in more than one activity sector, the sector with the highest sales will be used.
  • If the main activity of the enterprise is one of those listed in Art. 3 of Resolution 340/2017, the value of its assets must be verified and found to be no more than ARS 100 million.

Furthermore, the Circular allows the total annual sales to be calculated from the enterprise’s financial statements or by means of a statement of net sales from a chartered accountant.

Affiliation and control

The regulation excludes from the MSME definition those enterprises that, while meeting the above requirements, are controlled by or affiliated to other enterprises or economic groups. It defines these relationships as follows:

  • Control: an enterprise is controlled by another when the latter either has a direct participation or, through another enterprise which in turn it controls, it owns more than 50% of the first enterprise’s capital.
  • Affiliation: an enterprise is considered affiliated to another company or group when the latter holds 20% or more capital in the former.

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