02 December 2009

Buenos Aires Technology District: An Interesting Option for Tech Companies

Today I met with Carlos Pirovano, the Undersecretary of Investments for the City of Buenos Aires to learn about the Buenos Aires Technology District. The district is a 200 hectare zone that circles Parque Patricios.

Objective of the Technology District
The goal of the district is to revitalize the area surrounding Parque Patricios, which is an area that the undersecretary said has been targeted by Macri's government as a zone they want to focus on. Although they said they are not in competition with the technology park in the Province of Buenos Aires, I'm sure that the city doesn't want to lose technology jobs to the Province.

Tech companies that move into the district are given a 10 (multinationals) or 15 (small businesses) year exemption from payment of most city taxes, including municipal taxes (ABL), sales taxes (ingresos brutos), and stamp taxes (impuesto de sellos). In fact, the district's largest company, Iron Mountain, was able to take advantage of the benefits even though they didn't actually move into the district. The district was actually created around their preexisting offices.

Who Qualifies
Just about any technology company will qualify, but only technology companies. As long as 51% of the company's income is related to technology, the company will qualify for the benefits. This means -- software development firms, hardware companies, technology education companies, internet companies, and even retailers that sell online (as long as 51% of the company's income comes from a website and not a physical store location).

Every technology company qualifies, no matter its size. The district already has companies with as few as 4 employees and as many as 1400.

The law become active in June of 2009 and there are already 22 companies operating in the district, most notably TATA, Iron Mountain, and Clarin Global. There is a lot of interest, however. At today's meeting with the undersecretary there were 11 companies present, including Oracle. According to the Ministry of Economic Development, in addition to the 22 companies already in the district there are currently 35 companies looking for offices with the assistance of Ministry and they are receiving 150+ inquiries every week. So, it looks like 2010 will be an important year for the district.

My Impressions
I have to say that the project appears very intersting and I am going to consider it seriously. My software company's office rental contract expires soon and we need to either renew or move anyway, so it will be an interesting option for us to consider.

I was impressed with the representatives for the technology district and how they help the companies through the process of registering. Each company is assigned to a specific investor representative who has an email address and phone number and can help your company through the process. Anyone who knows anything about doing business in Buenos Aires knows that this is very rare. Usually interactions with a government entity mean going to some faraway office, standing in line for 2 hours and then being told that you're missing a paper and have to leave and come back later and repeat the process.

The undersecretary told me that after submitting the documentation, they will review it and give you a yes or no answer within 5 days as to whether your company will qualify. If you qualify, they put you on a "pre-approved" list. After you're on this list, you then just need to go and rent or buy a property within the district and submit your rental contract or title. After that, within 15-30 days you'll be given notification from the city tax office that you've been granted the exemption from city taxes.

Given that this is Argentina, I have to say that it is a very efficient process. The national software promotion law can take 9 months - 1 year to qualify for and it is much more difficult for the companies to prove that their activities fall within the scope of the law. How do you prove that your business qualifies for the city? Simple, you sign an affidavit stating your company's line of business. That's it. They review your statement and will decide whether your business fits within the law, but it all seemed very simple.

I would suggest anyone that is looking for more information to contact the City of Buenos Aires' Center for Investors to receive the details directly. They have representatives who speak English and are perfectly equipped to attend to international investors.

1 comment:

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