Argentina: New incentive regime for large investments approved
The Argentine Congress approved an incentive regime for large investments.
Through Law 27,742, the Argentine Congress approved an incentive regime for large investments (Régimen de Incentivo para Grandes Inversiones or RIGI).
By providing unprecedented incentives and generating the conditions of predictability, stability and legal certainty, it encourages large long-term domestic and foreign investments in the following sectors:
- Industrial forestry
- Infrastructure
- Mining
- Energy
- Technology
- Tourism
- Oil and gas
- Steel industry
The incentives provided under the RIGI include:
- The effects of the exchange controls that Argentina currently has in force or implements from time to time disappear in practice.
- The corporate income tax rate is set at 25% with the benefit of accelerated depreciation, absence of time limits in the computation of tax loss carry forwards (with a mechanism to avoid its dilution by inflation), and under certain conditions there are very important reductions in the withholding tax rates applicable to dividends and payments abroad.
- It also provides for a mechanism to prevent value added tax (VAT) from becoming a financial and economic burden and, under certain conditions, exemptions from import and export duties, among others.
Regarding formal requirements, the inclusion of a project under the RIGI requires an application by a single purpose vehicle (Vehículo de Propósito Único or VPU), which is basically a separate Tax ID and accounting records for the project. As per the substantial requirements, projects need to involve investments in “computable assets” that may not be less than USD 200 million. Depending on the sector, the minimum amount can be higher. The application must be accompanied by a full description of the project, investment, financing, funding, and certain technical studies.
RIGI provides guarantees through special protection in the event of deviations and/or non-compliance by the Argentine State. The tax and customs incentives and the special regime of foreign exchange regulations cannot be modified by more burdensome legislation during the 30 years following the approval/commitment of the project under the RIGI. Any dispute relating to the RIGI may be submitted, at the option of the RIGI beneficiary company: 1) under the PCA rules; 2) under the arbitration rules of the International Chamber of Commerce; or 3) under the ICSID rules.
Read the full text of the norm: InfoLEG - Ministerio de Justicia y Derechos Humanos (Spanish)
For more information, contact a KPMG tax professional in Argentina:
Gonzalo Brest | gbrest@kpmg.com.ar
Hernán Caire | hcaire@kpmg.com.ar
Juan Martin Jovanovich | mjovanovich@kpmg.com.ar