South America is one of the largest economic areas in the world. However, carrying out business on this continent contains copious amounts of challenges – from administrative, managerial, legal and logistical issues. The Latin American space is a difficult one to navigate and should be approached cautiously.
Argentina has faced many financial crises over the decades. Currently, the country is engulfed in a financial crisis that led to its residents queueing up to banks to withdraw dollars from their accounts. In 2019, the Latin American economy grew by a shocking rate of 0.1%. The Latin American economy’s Purchasing Power Parity is the equivalent of Japan and Germany’s economies combined – and nearly half the size of North America’s economy. However, a large portion of Latin America’s economy is informal and lacks the institutional framework needed for a free economy to blossom.
The pandemic hit Argentina hard from the start, and the economic costs have had disastrous consequences. In April 2020, Argentina’s economy diminished by 26.4%, leading to a drop in local citizens’ quality of life.
If you are opening a business in South America, seek advice and risk management services to make sure you’re making the best decision.
There are many challenges involved in starting a business in Argentina – and ways to overcome them. Here are a few of the issues you may face in the Argentinian business industry.
Starting a business
To even start a business in Argentina, you have to go through a staggering fourteen procedures over twenty-six days. It costs 12.3% of income per capita.
You will also be faced with construction permits, which can be time-consuming and tedious to deal with. You will need to complete twenty-four procedures to get a permit, so it’s best to leave at least a year to do this.
Electricity is also essential for businesses across the globe. You will need to get approval of your electrical plans from the appropriate Municipality. You will also need to discuss your procedures with the Argentine distributor of electricity, Edesur, which can take an additional thirty days.
Furthermore, you need to register the property for your business. This will take seven procedures and a whopping fifty-five days on average. Before operations can begin, you also need to get a certificate of ownership and a certificate of good standing from the Real Property Registry. Every step of setting up a business in Argentina costs a lot of time and money.
Taxes are very complicated in Argentina. You need to make around nine payments a year, totalling 405 hours overall. The taxes are very high, and many of them overlap. It may be worth outsourcing someone to take care of this if you are unfamiliar with local taxes.
However, Argentina’s main advantage is that they have one of the most streamlined credit processes in Latin America. Of course, there are still four difficult procedures to go through and a steep price.
Trading overseas from Argentina can be tricky. There is a new tax on foreign purchases made by credit or debit cards, which has also been extended to include international flight tickets and foreign services payment.
Argentina is a difficult country to navigate in business. Make sure it is the right destination for you before embarking on this new business venture.