BCRA Amended Foreign Exchange Regulations on Payments of Profits and Dividends

The measure passed by the Central Bank of the Republic of Argentina (BCRA after its Spanish acronym) amended the consolidated text on regulations on “Foreign Exchange” (‘Exterior y Cambios’), with the purpose of allowing access to the foreign exchange market for the payment of profits and dividends to non-Argentine resident shareholders without the need of prior approval, subject to compliance of certain requirements.

As in the previous foreign exchange controls regime, profits and dividends must correspond to finalized and audited financial statements of the local company.

Foreign exchange regulations required the prior approval of the BCRA to access the foreign exchange market for the payment of profits and dividends abroad, regardless of the amount involved. With this amendment, access to the foreign exchange market is granted for payments under these concepts as from January 17, 2020, in an amount that (including the amount of the payment being made at the time of the access) do not exceeds 30% of the value of new capital contributions of foreign direct investments. These contributions must be made to the local company and must be transferred to Argentina and sold for Argentine Pesos through the foreign exchange market as from such date.

Among other requirements, it is stated in the amendment that access to the foreign exchange market for the payment of profits and dividends must happen in a term of no less than 30 calendar days as of the sale for Argentine Pesos, through the foreign exchange market, of the last capital contribution that computes to meet the 30% requirement mentioned above.

Access to the foreign exchange market for the payment of profits and dividends in cases not contemplated in the amendment will require prior approval of the BCRA.