Communication A5295
Payment of services
On March 9 2012 the Argentine Central Bank enacted Communication A5295, establishing certain rules that regulate media and technology companies' payments abroad.
Communication A5295 sets forth that, if the payee is a foreign party that is directly or indirectly related to the paying party (under Communication C40,209) or to a foreign party that resides in a tax haven (under Decree 1344/98), payment for the following rights or services requires the prior approval of the Central Bank:
- certain IT services;
- professional and technical services;
- royalties;
- patents and trademarks;
- copyright;
- commercial guarantees for exports of goods and services;
- rights over foreign films and other videos and audio content;
- technology transfer under Law 22,426, with the exception of patent and trademark royalty agreements under the law.
Such approval is not required for agreements in respect of payments that do not exceed $100,000 during a calendar year.
Communication C40,209 states that there is a direct relationship between legal entities and individuals if:
- one party (directly or indirectly) exercises control of the other party, or the parties are under common control;
- the parties have common directors, as long as such directors form the majority of the board of both entities; or
- there is control by one legal entity or an individual when it is proved that such entity or individual:
- holds or controls 25% or more of the votes in the other company;
- has held 50% or more of the securities with voting rights in meetings where the directors or similar authorities have been elected; or
- holds a participation of any kind (even if the voting rights held are less than 25%), but such holding permits the party to exercise decisive power in a shareholders' meeting or to adopt decisions in the board of directors.
The information to be presented by the paying party will vary depending on whether the payment of services has a direct relationship with the activity that the debtor of the service holds. If a payment has a direct relationship, the paying party must present the intermediary bank with the documentation proving that the transaction is genuine, in terms of the concept thereof, the service rendered and the amount to be paid. The intermediary bank must request any documentation that it deems appropriate to verify:
- the data presented by the client;
- the registration obligations for agreements under Argentine law; and
- the beneficiary of the transfer.
In cases where the services provided are not directly related to the activity developed by the local party, Communication A5295 sets forth the guidelines of the auditors' report of the paying party that must be presented along with the authenticated copy of the service agreement that supports the payment request, so that the local bank can verify the effective rendering of the service and the existence of the debt.
For further information on this topic please contact Roxana Kahale at Kahale Abogados by telephone (+54 11 4116 4155) or email ([email protected]).