On December 21, The Emergency Decree No. 70/2023 titled ‘Foundations for the Reconstruction of the Argentine Economy’ (the ‘Decree’) was published in the Official Gazette. This decree marks the initiation of a comprehensive series of measures designed to reform both the State and the Argentine economy under the new government.

The Decree establishes the foundations for the deregulation of the economy, the services, the industry, and the Argentine State. The main objective of these measures is to adjust the public accounts and finances, and to free the economy by repealing laws and decrees.

The Decree repeals many laws and decrees which regulate public and private matters. The reform measures cover the public sector, state-owned companies, specific sectors of the economy, foreign trade, flexibilization of labor contracts, deregulation of commercial aviation, and contractual rules, among other matters.

Effective date:

The Decree does not contain a rule stating its effective date. Therefore, and in accordance with the provisions of the Civil and Commercial Code, the Decree will become effective as of the eighth day of the publication: December 29, 2023.

Decree validity:

The validity of the Decree will depend on its approval by the Legislative Branch. If the Legislative Branch does not approve or reject it, the Decree will remain in force. If it is rejected, the rights acquired during its effectiveness are safeguarded.

Process of approval by the Legislative Branch:

The process for its endorsement by the Legislative Branch will begin with the submission of the Decree before the Permanent Bicameral Commission by the Chief of Staff within the term of ten days. Once submitted, the Commission will have a term of 10 working days to rule on the validity of the decree and present the opinion to each Legislative Chamber. The Chambers may only accept or reject the decree. The Decree will lose its validity only if both Chambers reject it.

The Congress is currently in recess due to the conclusion of the ordinary sessions, which will resume on March 1, 2024. The Executive Branch may call for extraordinary sessions in the event of a serious interest of order or progress.

The amendments:

The Decree divides the reforms into 16 titles divided by subject matter. Below, we present some the main points within each part:

I. Bases for reconstruction

• An emergency is declared in economic, financial, fiscal, administrative, social security, tariff, sanitary and social matters until December 31, 2025.

II. Economic deregulation

• The regulatory framework on the commercialization of products in the Argentine market is repealed.
• The Decree substantially modifies the credit card regime including new obligations such as informing the public the financing rate. The cap on penalty interest was eliminated and it was stipulated that penalty interest is not capitalizable.
• The definition of credit card issuer that limited the issuance of credit cards to financial, commercial or banking institutions was modified. The new regime allows issuers to be institutions of any kind.
• The regime of movable credit operations made by means of certificates of deposit and warrants was modified.
• The obligation to make judicial deposits in the Banco Nación was eliminated, as well as the obligation of the State, agencies and state-owned companies to deposit funds in foreign currency in the Banco Nación.
• The law on lease agreements entered into for tourism, leisure or similar purposes and whose statutory term is less than 3 months was repealed.

III. State Reform

• The law on state-owned companies, the regime of mixed-economy companies and the regime for the operation of state-owned companies were repealed.
• The transformation of corporations with state participation into stock companies was provided for. Such companies will be subject to the General Corporations Law on an equal footing with companies without state participation and will not enjoy any public prerogatives. A term of 180 days was stipulated for the transformation and registration of the transformed companies. Companies with state participation will be subject to permanent state control. The Financial Administration Law and the regulations applicable to the control of the public sector will be applicable only when the State has a majority shareholding in said corporations.
• The privatization of the Banco Nación was enabled, and the privatization of state-owned companies was permitted.
• The Participated Ownership Program of state-owned companies was partially modified to facilitate the transfer of the shares of the currently state-owned companies to their employees. To this end, the partial or total transfer of the shares of Aerolíneas Argentinas S.A. and Austral Líneas Aéreas - Cielos del Sur S.A. and their controlled companies to their employees was authorized.
• The law requiring the Argentine State to purchase, contract and acquire national services was repealed except for the articles imposing penalties.
• The law that stipulates the basis for adjusting retirees and pensioners’ benefits was repealed.

IV. Labour

The Decree provides for the elimination and modification of different labor regulations. The most relevant labor-related points of the Decree are the following:

• The elimination of fines for unregistered or improperly registered employment contracts.
• Authorization to establish a voluntary severance compensation fund to replace the current severance compensation system. This fund would be similar to the one used in the construction industry, and its implementation would be subject to negotiation in collective bargaining agreements. The cost of this fund shall be borne by the employer, with monthly contributions that may not exceed 8% of the employee’s salary.
• Increase of the probationary period from 3 to 8 months.
• Modification of the interest rate applicable to severance payments.
• Creation of the category of ‘independent worker with collaborators’.
• Inclusion of union blockades as a fair cause for termination.

V. Foreign Trade

• The prohibition on the importation for consumption of retreaded (N.C.M. 4012.10.00) and used tires (N.C.M. 4012.20.00) is repealed.
• Modifications to the Customs Code:
• The obligation for the intervention of a customs broker for an individual or entity to carry out a foreign trade operation is eliminated. They may manage the clearance and destination of the goods by themselves or through an authorized person.
• The registration of customs brokers in charge of the National Customs Administration is eliminated. From now on, it will only be necessary to have a customs broker degree. The articles that regulated the registration process and the control powers of the Customs Office are repealed. The incompatibilities to act as a customs broker are modified.
• The registration of importers and exporters for individuals and entities is eliminated. Any individual or entity may import or export without the need to have a special authorization issued by Customs Office. The articles that regulated the registration process and the control attributions of the Customs Office are repealed. The requirements and incompatibilities to act as importer and exporter are modified.
• The sanctioning regime for foreign trade operators is adapted to the new regulations.
• The importer may request the import destination prior to the arrival of the transportation, by means of direct dispatch to the place of destination.
• Importers and exporters may request a binding consultation prior to the foreign trade operation regarding the customs treatment of such operation.
• The control powers of the Customs Office and security forces in order to preserve the continuity of the import and export operations in progress are limited. The interruption will only proceed when there is strong evidence about the existence of an infraction or crime.
• Promotes the simplification and digitalization of procedures, publicity of regulatory standards, and professionalization of customs staff. The Decree provides that the electronic or digital signature of customs officials is equivalent, for all legal purposes, to a handwritten signature.
• The Executive Branch may not establish prohibitions or restrictions on exports or imports for economic reasons (among them, those aimed at protecting a certain industry or national market). They may only be established by law.
• The chapter referring to the price equalization tax is repealed, so that the Executive Branch may not establish specific import duties to equal the prices of imported products with those offered by the national industry.

VI. Bioeconomy

The Decree details a series of laws repealing various areas of economic activity related to agriculture and the food industry.

• Among the repealed laws are provisions related to the protection of the national domain over rural lands, wine making contracts, the regime of sugar deliveries for domestic consumption, national wine policy, industrial promotion, structural measures for the wine industry, establishment and creation of establishments for the packaging rules for yerba mate, the national corporation of olive growing, packaging for products destined for livestock feed, and the integral policy for cotton.

• The regime of protection of the national domain over rural lands, which limited foreign ownership, was repealed.

These derogations mean a review and simplification of regulations in the field of bioeconomy, seeking to eliminate restrictions to promote the development of this economic area.

VII. Mining

The laws that established the National Mining Trade System and the National Mining Information Bank on Equipment and Human Resources, which operated under the National Mining Secretariat, were repealed. The repealed laws (passed by the Legislative Branch several years ago) were not currently executed.

At the moment, the collection and processing of data on mining activity is carried out through the Information System Open to the Community on Argentine Mining Activity (SIACAM).

VIII. Energy

• Eliminated the maximum terms for exclusive fuel supply contracts, regardless of the commercial or legal form used, entered into between oil companies and/or fuel suppliers and those who operate gas stations.
• Eliminated the restriction that limited oil companies and/or fuel suppliers to have a 40% participation as owners and/or operators of the total network of gas stations that commercialize the brands they own.
• The decree applicable to export contracts for Firm Power and Associated Electric Energy and the Generation Commercialization Agreements related to such exports, which provided that such contracts were not covered by the pesification clauses contained in Law 25,561 of Public Emergency and Reform of the Exchange Regime and Decree 214, enacted in 2002, was repealed.
• Eliminated the power of the Energy Secretariat to adjust the fee or price corresponding to the unexecuted part of an Extension of Electric Energy Transportation in High Voltage or Trunk Distribution when the cost of the main items comprised reaches a value that results in an average variation in the prices of the extension contract of more than 10%.
• The federal electricity transmission plan implemented in 2003 and financed with surpluses due to transmission capacity restrictions was repealed.
• The decree that granted refundable loans from the National Treasury to the Unified Fund for the payment of the Fund's obligations for the fulfillment of its specific functions and to guarantee the stability of the price system in the Wholesale Electricity Market was repealed.
• The Secretariat of Energy is empowered to reorganize the current subsidy structure in order to ensure end users access to basic and essential consumption of electricity and gas considering their household income and to establish the specific mechanisms to materialize the allocation and collection of subsidies by users.
• The regime for the promotion of distributed generation of renewable energy was modified by repealing the provisions of the Trust Fund for the Development of Distributed Generation, the promotional benefits and the regime for the promotion of the national industry.

IX. Commercial Aviation

The Decree causes a substantial change for this industry by promoting an ‘open skies’ policy:

• Stipulates that this is an essential service.
• The Commercial Aviation Policy Law and several rules of the Aviation Code were repealed with the purpose of facilitating the entry of new airlines, under the principles of competition, non-exclusivity, and free pricing. The elimination of the public hearing mechanism and the repeal of Decree 1654/2002, which allowed the establishment of tariff bands, stand out.
• The modification of the Aeronautical Code also allows for greater access to foreign companies by eliminating requirements for an Argentine ownership majority.

X. Justice (Civil and Commercial Code)

• The debtor of an obligation to pay a sum of money is only released from payment if it delivers the amount owed in the currency and/or kind established by the parties. The courts may not intervene in the form of payment and currency fixed contractually.
• The supplementary application of the laws at the time of contracting is emphasized, holding that judges may not modify on their own initiative what has been stipulated by the parties.
• The lease for housing law is repealed.
• Regarding lease agreements, the law establishes the lease consideration, bond, or security deposit may be of any currency agreed by the parties. The lessee may not make payments in a currency different from that established contractually.
• The parties may freely agree on the adjustment of the lease consideration. Therefore, the use of any index agreed upon by the parties, public or private, expressed in the same currency in which the rents were agreed upon, will be valid.
• The term of the leases with any destination will be the one established by the parties. In case this has not been agreed upon, it will be: For temporary leases, the term established by the uses and customs of the place where the leased property is located; For leases intended for permanent housing, with or without furniture, it will be two (2) years and for purposes other than those mentioned above, it will be three (3) years.
• The tenant may, at any time, terminate the contract by paying ten percent (10%) of the balance of the future rental fee, calculated from the date of the notice of termination until the termination date agreed in the contract.

XI. Health

The Decree provides for different modifications to the regulations of health providers and sale of medicines:

• Makes profound modifications to the Social Security Law. One of these modifications consists in the incorporation of the Prepaid Health Care System to the Social Welfare System.
• Several repeals and amendments were made to the Prepaid Medicine Law; the National Health Insurance System Law; the Law on the Regime of Traceability and Verification of Technical Aptitude; the Law on Electronic or Digital Prescriptions; the Law on the Practice of Medicine, Dentistry and Collaborative Activities and the Law on the Legal Regime for the Practice of the Pharmaceutical Activity and the Authorization of Pharmacies, Drugstores and Herbalist's Shops. Finally, the Regulatory Decree of the Right of Exchange Option was amended.

XII. Information and Communications Technology

• The Decree simplifies the licensing regime and allows those individuals or legal entities that hold satellite broadcasting licenses and mobile broadcasting service licenses to also hold licenses for other services.
• Likewise, the Argentina Digital Law is amended, the main modifications being the inclusion in the market of ICT service providers that use technology based on the IP protocol and of those ICT service providers by satellite.
• The provision of satellite communications system facilities shall be free. The owners of such systems shall be required to register for their operation, for the sole purpose of coordinating the use of radio frequencies and avoiding interference with other systems.

XIII. Sports

• The Decree provides that legal entities that are members of the Institutional System of Sports and Physical Activity (established by Law No. 20,655) may be incorporated as corporations whose purpose is the practice, representation, organization, etc., of sports and physical activities.
• In this sense, the Decree prohibits the infringement of any right of a sports organization due to the legal form in which it is incorporated. The Decree exemplifies the right of affiliation to a confederation, federation, league, etc.

XIV. Corporations

In close connection with the incorporation of sports corporations, the Corporations Law is amended as follows:

• Establishes the possibility for non-profit associations and corporations to participate in joint stock companies and limited liability companies.
• Establishes that a civil association may be transformed into a joint stock company or become a partner of another joint stock company, but with the approval of a special majority of two thirds of the associates.

XV. Tourism

Laws on Hotel Regulation, Regulation of Travel Agents, and Regulation of Timeshare Tourism Systems are repealed. Such repeals in order to:

• Deregulate the tourism sector by eliminating the monopoly of tourism agencies.
• Achieve greater competition among the companies of the sector.
• Free the activity of private tourist accommodations and reduce their bureaucratic burden.

XVI. Automotive Regime

The Decree grants greater powers to the National Directorate of Motor Vehicle Registries. Main changes: digitalization of the registration process of the vehicle, when it is the first registration of the vehicle and the possibility that the registrations or annotations may be made before the Sectional Registries or before the National Directorate of the Registry of Motor Vehicles, being able to choose either one.