ARGENTINA Law and Practice Contributed by: Manuel Tanoira, Lucía Rivas O’Connor, Luis Merello Bas and Dolores Nazar, TCA Tanoira Cassagne
4.2 Tax Treatment Tax Implications
at promoting venture capital investments in early-stage companies. Although the law remains in effect, the current government has eliminated the fund, significantly reducing liquid capital support from the national gov - ernment. The only remaining form of support is the tax incentive through the ICE, which provides fiscal benefits related to corporate income taxes. • Local government programmes: Certain provinces like the Ciudad de Buenos Aires, Mendoza, Córdoba, Santa Fe and Entre Ríos, offer localised initiatives. However, these initiatives are relatively limited and are often more focused on support services rather than direct funding. • Alternative government-backed programmes: While direct funding from the government has diminished, initiatives from private accelera - tors, incubators and angel investors often fill the gap in early-stage company support. These programmes are crucial for start-ups seeking mentorship and business develop - ment opportunities in the absence of sub - stantial public financing. In the current economic context, with the coun - try facing significant macroeconomic challeng - es, government funding for start-ups is scarce. The lack of venture capital funds, coupled with the absence of a developed capital market or traditional financing tools (such as bank loans for start-ups or pension funds for VC invest - ments), has led to Argentina’s entrepreneurial ecosystem competing on a regional scale with fewer resources compared to other countries. However, despite these challenges, Argentina continues to have one of the most dynamic entrepreneurial ecosystems in the world.
Tax benefits for start-up investors are limited. The Ley de Apoyo al Capital Emprendedor (Law of Support for Entrepreneurial Capital) offers limited relief; while the deductibility of individ - ual equity investments exists, the Argentine tax system presents less favourable conditions for investors compared to other jurisdictions. The Ley de Economía del Conocimiento (Law of Knowledge Economy) aids tech start-ups with income tax exemptions and credits, but these mostly benefit companies, not investors directly. With Fondo Nacional de Capital Emprendedor (FONDCE) gone, government support depends on I ncentivo al Capital Emprendedor (ICE) and provincial efforts. The lack of available financial tools is holding back Argentina’s ecosystem, forcing it to rely on private capital. The tax treatment of investments in growth, start-up and venture capital fund portfolio com - panies in Argentina has some key characteris - tics, with a focus on tax incentives and capital gains taxation. While there are limited benefits, some initiatives aim to stimulate investment in the entrepreneurial ecosystem, the details of which are as follows. Individual investors may make personal invest - ments in start-ups and potentially deduct these investments. This tax relief is available for indi - viduals making direct equity investments, but the process remains relatively underdeveloped in comparison to other jurisdictions. While there were plans to provide significant financial backing to entrepreneurs and growth companies, the elimination of FONDCE and mac -
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