Repatriation of Foreign Currency Proceeds of Exports - Exemption to Hydrocarbon and Mining Companies Removed

Until the issuance of Decree No. 1722/2011, published in the Official Gazette on October 26, 2011 (the “Decree”), (a) mining companies that had qualified for the tax and foreign exchange benefits of the stability regime provided by Law No. 24,196 and in accordance with Decrees No. 417/2003 and No. 753/2004, were exempted from the obligation to transfer and sell for pesos in the local market (known as Mercado Único y Libre de Cambios or “MULC”) the foreign currency proceeds of their exports, and (b) companies that produced crude oil and its derivatives, natural gas and liquid petroleum gas were only required to repatriate 30% of the foreign currency proceeds of their exports of freely disposable crude oil and its by-products.

By eliminating those exemptions, the Decree assimilates the treatment of those companies to the one applicable to the rest of exporters of goods. Therefore, since the date on which the Decree became effective (upon its publication on October 26, 2011), hydrocarbon and mining companies must transfer and sell in the MULC the total amount of the proceeds of their exports within the expiration of the term indicated for each type of product by the Secretary of Industry and Commerce plus an additional general term of 120 business days. In addition, any of those proceeds that are collected abroad by the exporter must be transferred to the correspondent bank account of an Argentine financial entity within ten business days of collection.

Furthermore, on October 27, 2011, the Argentine Central Bank issued Communication “A” 5235 (the “Communication”) which modifies the mechanism applied by financial entities in connection with their responsibility of carrying out the follow-up and supervision of the compliance of Argentine exporters with their repatriation obligation. In this regard, the Communication states that financial entities in charge of carrying out the follow-up of the export transactions validated until October 25, 2011 may consider the compliance of Argentine exporters with the obligation of transferring the export proceeds, in the terms of Communications “A” 3971, “A” 3978 and complementary regulations, as long as the payment of the shipping has been done up to and including October 25, 2011.

To this effect, exporters governed by the Decree must transfer and sell in the MULC the total amount of the proceeds of their exports of goods validated since October 26, 2011 within the expiration of the applicable term, regardless of the collection of proceeds in a foreign bank account of the exporter, prior or later to the date of validation.