Entrepreneurs in Argentina will be able to register a new simplified form of company online within 24 hours from September 1.
It follows new regulations gazetted by the country's inspector general (IGJ) for the registration of simplified joint-stock company (SAS) on Thursday July 27.
The measure forms part of a number of others contained in Argentina’s new Entrepreneur Law approved by the senate in March.
The government hopes in time to allow 24-hour online registrations for all forms of companies.
The introduction of the SAS form will be the second business type that the country now allows for registering a business within one day, as the IGJ has since July 12 permitted a 24-hour online registration of a limited liability companies (SRLs).
Registration is through the IGJ’s website under the section for electronic registration.
Officials reported this week that registrations for SRLs have already climbed 50% since the introduction of the online measure.
The SRL differs from an SAS in that the SRL that requires the registration of least two partners. To register as an SAS requires only a single partner, with a minimum capital of two minimum wages, to receive a tax number and bank account in one day.
Among world's worst
Presently Argentina is one of the most difficult places to open a business. It is ranked by the World Bank at 157 out 190 countries when it comes to registering a business and takes on average 40 to 60 days to register a business.
However earlier this month the Inspector General of Justice, Sergio Brodsky (pictured above) said the changes will allow Argentina to climb the World Bank’s rankings, but only in next year’s report as the rankings are published in October and the study was conducted in May when the provision was not yet in force.
The measure is in line with a similar one enacted in neighbouring Chile in 2013, which allows for online registration in one day (see this earlier post).
In April statistics from Chile’s Ministry of Economy revealed that 72% of the 8,810 business registrations in Chile that month were performed online. The figure has climbed from just 29% of registrations in May 2013 when the measure was introduced.
Online registrations in Argentina could see similar growth. Under the new Entrepreneur Law the government has proposed the introduction of an incentive that allows investors to have 75% of any investment in an SAS company or SAS accredited investment fund tax-deductible for up to 10 percent of the investor’s annual profits.
Investors who choose to invest in less developed areas, with lower access to capital, will be able to deduct up to 85%.
Likely for this reason the government in March (when officials estimated the measure would be introduced within two months) projected that more than 40% of the new companies created this year will do so under the SAS form.
New Entrepreneurs Law
Argentina’s new Entrepreneurs Law also contains a number of other measures. These include:
The biggest threat however is the country's politics, which have long see-sawed between one extreme on the left, to another on the right. Yet if things are kept in check the world will once more be looking at Argentina with interest.
Timm is a South African who writes on small business. Click here to sign up for the monthly Small Business Insight newsletter.
São Paulo mayor and former businessman João Doria has pledged to cut the time it takes to open a business in South America's biggest city - to just two days by May 31, 2018.
Speaking this week at a franchise even, Doria, claimed he had already slashed the time it takes to register a business from over 100 days to just seven days, since he launched Empreenda Facil - a programme to make the city more business friendly - on May 8
The programme is being carried out in co-operation with the federal government’s tax authority, the government’s small business agency Sebrae and the state government of São Paulo.
Doria said on June 21 that up until May 31, it took a minimum of 128 days to open a business in the city (Endeavor Brasil in a report however had it at a minimum of 136 days in 2016, putting it ahead of several other Brazilian cities, but behind others like Belo Horizonte at 62 days and Uberlandia at 52 days)
Doria’s office is targeting to lower the present seven days to five by December 31 and two days by May 31 2018 (which Doria says is on the level of countries like Germany, the US and Norway).
'Among top five'
It will make São Paulo among the five most entrepreneur-friendly cities says Doria,
Since the programme was launched on May 8, a total of 18,000 applications have been lodged, according to a report on June 19. It translates to double the average of 250 applications per day under the old system, the city government says.
In this first phase, the city is processing only applications involving businesses that do not need specific licenses to operate. These make up about 80% of firms in São Paulo.
Yet the programme is not yet working at full steam – it took one entrepreneur 30 days to register his business, according to one report. Still it’s less than a third of the average time it took under the old system.
A key reason for the current delays – according to a newspaper report earlier this month – is that entrepreneurs must still apply in person for a municipal tax registration number for their business, with the waiting time earlier this month reaching two weeks. The city authorities have pledged to move the process online by the middle of next month.
However the city’s secretary of innovation, Daniel Annenberg said most of the appointments have been concluded on time and denied that the system was overloaded.
Since taking office on January 1, Doria is following up with a promise to clean up São Paulo.
He’s launched a programme to beautify the city, tackled the city’s famed graffiti and tagging problem by jailing taggers and with mixed results has tried to remove a crack neighbourhood, one of the city’s infamous eyesores. He’s also seeking to privatise many of the city’s properties and assets.
It’s not just São Paulo. Argentina earlier this year passed a new Entrepreneur law which among other things will allow for the online registration of companies in just 24 hours, down from the present over six months.
During his eight years as head of Buenos Aires state Argentina’s president Mauricio Macri – also a former businessman – turned the capital into a leading entrepreneurial city.
He did so largely through offering free business training, venture capital and getting players to work together for example through backing co-working hubs. This, despite the country’s status as a laggard when it comes to doing business.
In 2015 the city was selected from more than 50 cities as the winner of the Global Entrepreneurship Congress’s Cities Challenge (see this publication by the Global Entrepreneurship Monitor’s for more).
With two thirds of the world's population expected to live in urban areas by 2050 according to the UN, getting cities to become easier places to do business is crucial.
Much of this growth is expected to take place in emerging economies, making it critical to turn cities there into hives of entrepreneurial activity.
Timm is a South African who writes on small business. He lived in São Paulo from 2014 to 2015. Click here to sign up for the monthly Small Business Insight newsletter.
The number of registered small businesses in India has more than quadrupled since 2006, driven partly by the introduction of an online portal in 2015,
Figures provided by India's Udyog Aadhaar Memorandum portal show that registrations have grown from 1.5 million firms in 2006 to 6.8 million as of this year.
Though registered firms continue to account for a small fraction of India's firms, they have grown from about 4% of all SMEs in 2006, to about 13% of the estimated 51 million firms, contained in the ministry's latest annual report.
In an interview this week with The Times of India, Small Business Minister Kalraj Mishra said the portal allows an entrepreneur to enter all relevant information online.
“You click on it and within five minutes you can get your registration without any documentation and with self-certification.”
Previously to register as a MSME entrepreneurs had to complete various manual forms.
He said while between 2006 and 2015, almost 2.2 million companies were registered in India under the old Entrepreneur Memorandum, since September 2015 alone over 3 million new registrations have been carried out online.
Mishra said of the ministry’s estimate of 50 million companies, less than 10 million are registered. “The unregistered ones still pay sales tax so we can estimate their size,” he added.
The Indian government is seeking to use the power of the internet to boost SME support in other ways too.
Last month the government launched a mobile app (MyMSME) for tracking data from business-related schemes and a to monitor delayed payments to small businesses from public sector undertakings (Micro and Small Facilitation Council portal).
While technology can help firms to bypass reams of red tape, India must still do much more to incentivise tens millions more firms to register.
The government is hoping more firms will register on the portal - as registration enable firms to to access the many support and finance schemes that the state offers SMEs.
A harder job is to make it easier to do business by cleaning up the corruption and paperwork (which Prime Minister Narendra Modi is trying to tackle) that discourage entrepreneurs from registering their firms. In this India has a long way to go still.
Timm is a South African who writes on small business. Follow Small Business Insight on Twitter at @Smallbinsight.
It takes 43 days on average to register a business in South Africa, placing the country as one of the slowest among emerging economies, the World Bank's latest Doing Business report reveals. The report was released this week.
This is an improvement of three days over last year. Yet in 20 other emerging economies it takes far fewer days (see graph).
A number of African countries outdo South Africa. These include Rwanda (4 days), Egypt (7 days), Algerian (20 days) and even one of the most cumbersome countries to do business in the world, Angola (36 days).
Since 2008 a number of emerging economies have cut the time it takes to register a business. Chile for example has slashed it from 40 days to 5.5 days (see this post) and Russia from 29 days to 10 days (see this post).
Despite this the Minister of Trade and Industry Rob Davies (pictured above) said in the Companies and Intellectual Property Commission’s (CIPC) 2015/16 annual report that the commission had over the past four years cut the number of days it takes to register from more than 25 working days to just four working days by end of March this year.
Some of this has come down to allowing banks to handle name reservations, which can now be done in a day. The last financial year saw a healthy increase in company registrations from 236,673 to 317,498 - most likely because of this change.
Last month CIPC acting commissioner Rory Voller told Business Day that automation has helped speed up the process, although the high volume of applications sometimes resulted in computer timeouts. Better systems would therefore help.
Yet while the CIPC has been beset by problems of recent in its bid to modernise, the bottlenecks are to be found elsewhere - at the Department of Labour.
Seven steps, three agencies
The World Bank outlines the seven steps it takes to register a business in South Africa. After completing a name reservation (one day) one then has to register the company at the CIPC online. This takes on average 10 days, says the World Bank.
Thereafter one can register for the various tax types at the SA Revenue Service (Sars) within one day. If one registers for value-added tax (VAT) this will take a further seven days.
The real time waster it seems, is the Department of Labour. Employers must wait on average 30 days to register for the Workmens Compensation Fund. Registrations for the Unemployment Insurance Fund (UIF) - which can be done at the same time - take five days.
Clearly then the hold up is more with the Department of Labour than with Sars or with the CIPC (even though the commission needs to bolster its capacity and systems still).
South Africa should stop tinkering with making the business process speedier. A single portal where all the registrations steps can be handled might help.
Timm is a South African who writes on small business. Download the latest Doing Business report here. Follow Small Business Insight on Twitter at @Smallbinsight and on Facebook.
Stephen Timm is a