Disruptions to the labor market caused by the COVID-19 pandemic led to a wide range of relief and incentive measures established by most governments.
As businesses work faced the impacts and uncertainties of the novel COVID-19 crisis, companies should keep track of the relief and stimulatory measures implemented.

By way of example, the Argentine Federal Government enacted Decree No 332/2020 which created the Labor and Production Emergency Assistance Program (known as ATP by its Spanish acronym), aimed at granting  incentive benefits to those companies most affected by the pandemic. These benefits can be summarized as follows:

• Social security benefits. Reduction payment up to 95% of social security contributions on salaries paid by employers for the April - December 2020 fiscal period or alternately, a deferred payment of social security contributions for the same fiscal period.

• Access to credits at a subsidized rate. The subsidized interest rate loan consists in the financing of up to the amount of one hundred and twenty percent (120%) of a living wage per employee and shall not exceed the net salary per employee. This benefit is applicable for entities with fewer than 800 employees.

• Compensatory salary allowance. The payment by the government of 50% of the net salary per each employee for the period of April to December 2020, with a minimum value of one living wage and a maximum value of one and a half or two living wages (depending on the month) or the net employee salary, whichever is lower.

• The payment of a fixed sum on account of the salary per each employee for January 2021 and the subsequent periods. The fixed sum amounts to ARS 9,000 for non-essential activities, ARS 12,000 for essential activities and ARS 18,000 for employers of the health and medical sectors (this program is known as “REPRO II” by its Spanish acronyms). Recently, the Ministry of Tourism has officially announced a complementary allowance of ARS 4,000 for companies and entities of the tourism sector.¹

To be eligible, companies should meet the following requirements to apply for the above-mentioned benefits: a) have had a significant reduction of their revenue since March 12, 2020 compared with a similar period of 2019 and; b) perform activities significantly affected by COVID-19 pandemic.

Applicants’ obligations

The grant of these benefits is controlled by the Chief of Staff of the Executive Power, the Federal Administration of Public Revenue (known as AFIP by its Spanish acronym) and the National Ministry of Labor, Employment and Social Security.

Furthermore, a special Committee for the Evaluation and Monitoring of the Labor and Production’s Emergency Assistance Program (hereinafter, the “Committee”) created to define the standard applied for the beneficiaries’ eligibility, is entitled to examine their applications and request all necessary documentation.

To apply for the benefits, companies must provide AFIP and the Ministry of Labor, Employment and Social Security with the following:

• The company’s billing information.
• The company’s last financial statement signed by the corporate authority and certified by the Accountants Bar Association.
• A socio-economic and labor report with the current company’s financial, economic, and net-worth indicators.
• An employer’s affidavit certifying the information provided.

Additionally, the applicants should refrain from the following:

• pay dividends for fiscal periods closed since November 2019;
• buy-back their shares either directly or indirectly;
• acquire securities in Argentine Pesos (ARS) for their immediate sale and purchase of foreign currency or its transfer overseas;
• disburse any kind to subjects directly or indirectly related to the beneficiary and domiciled in a low-tax jurisdiction or a tax haven.

Compliance Risks

As it was previously mentioned, the federal government created the Committee to promote transparency in the eligibility of companies benefited with relief measures.
Once the grant of the Labor and Production Emergency Assistance Program relief (ATP) concluded in February 2021, AFIP submitted a report informing the list of all the ATP relief beneficiaries to the Committee.

In such a report, the AFIP authorities analyzed the conditions under which the benefits were granted and concluded that numerous companies did not comply with the applicable requirements which triggered sanctioning procedures against non-complying companies.

To avoid any potential sanction, companies applying for the benefits should adopt internal procedures and strict compliance mechanisms to (re) assess the eligibility requirements and supervise if the funds provided were properly applied.

Effective compliance programs, duly performed and embedded into the company’s culture have significant and positive effects since they do not only prevent any potential infringement but also help to target the business’ risk areas and contribute to their mitigation.

1 Concerning the health and medical sector, the following benefits were established at the federal level: (i) reduction of 95% of social security contributions on salaries paid by employers starting from 21 March 2020 until 23 January 2021 and exemption from 24 January 2021 until 31 March 2021; (ii) reduction of the tax applicable on each debit and credit bank transaction from 0.6% and 1.2% to 0.25% and 0.50%, respectively, to employers of  the health and medical sectors as well health institutions starting from 21 March 2020 until 31 March 2021 and; (iii) exemption of the import duties of such medical supplies starting from April, 2020 and until the health emergency is concluded.