Argentina

Asset Regularization Regime

An Asset Regularization Regime was established by Law 27.743 providing taxpayers with a legal framework to disclose undeclared assets located in Argentina or abroad. This voluntary regime allows individuals, undivided estates and entities to bring previously unreported assets into compliance, such as real estate, financial instruments, and other properties, under specific conditions. By adhering to this regime, taxpayers avoid fines and penalties associated with non-compliance. Additionally, the law offers reduced tax rates based on the type and timing of the disclosure, incentivizing early participation.

Promotional Regime for Large Investment

The Argentine Congress has recently passed a comprehensive law package that introduces, among several legislative amendments, a Promotional Regime for Large Investment (RIGI for its Spanish acronym). This alert summarizes the key aspects of this innovative and attractive regime designed to attract large investments to the country.

RIGI is a comprehensive promotional regime designed to provide certainty, stability, legal security and protection to foster specific long-term investments in Argentina, by offering tax, customs, and currency exchange incentives.

The regime applies nationwide, encompassing sectors such as forestry, tourism, infrastructure, mining, technology, steel, energy and oil and gas.

The deadline to adhere to the regime is two years as from the law's enactment, with an option for a one-year extension.

Tax Incentives

1. Corporate Income Tax
   a) Tax Rate: The maximum rate will be 25%.
   
   b) Accelerated Amortization: i) For depreciable movable assets, amortization can be done in two equal and consecutive annual installments. ii) For investments in mines, quarries, forests, similar goods, or infrastructure, amortization can be done in the number of equal and consecutive annual installments based on 60% of their estimated useful life.
   
   c) Tax Losses: tax losses will be adjustable for inflation with no time limit for carryforward. If tax losses are not absorbed by taxable income within five years, these losses can be transferred to third parties.
   
   d) Dividends and profits distributions: taxable at a rate of 7%. After seven years from the registration date, the rate will be reduced to 3.5%.
   
   e) Interest expenses and FX losses: Restrictions on the deductibility of interest expenses and foreign exchange losses derived from foreign and local financing will not be applicable during the first five years from the registration date.
   
   f) Benefits for projects qualified as Long-term Strategic Exporters: i) No withholding tax on payments to non-residents relating to international transportation services and for services included in engineering, procurement, and construction management contracts. ii) a reduced withholding tax of 10.5% on payments to non-resident in all other cases (unless a lower rate is applicable by virtue of domestic law or an applicable tax treaty). No gross up provision should apply on those payments.
2. Value Added Tax (VAT): No VAT immobilization for VPUs, as they will be allowed to pay VAT to their suppliers using Fiscal Credit Certificates, which will not generate fiscal credit for the VPU and will be treated as freely available tax credits for the supplier.
3. Tax on Banking Transactions: Fully creditable against income tax payments.

Customs Incentives

1. Import Duties: Imports for consumption of goods, as well as temporary imports conducted by VPUs, including capital goods, spare parts, parts, and components, will be exempt from import duties, statistical rate, and from all national and/or local tax withholding, collection, advance payment, or retention regimes. This exemption may also be extended to imports destined to VPUs made by local suppliers (subject to special registration).
2. Export Duties: Exports performed by VPUs will be exempt from export duties after three years from the adhesion date (reduced to two years for projects declared as Long-term Strategic Exports).
3. Import and Export Restrictions: Registered VPUs can freely import and export without direct prohibitions, quantitative restrictions, quotas, or economic qualitative restrictions.

Foreign Exchange Incentives

Proceeds from exports performed by the VPU will be exempt from the obligation to enter and/or negotiate and liquidate in the exchange market in the following percentages: a) 20% after two years from the registration date; b) 40% after three years from the registration date; c) 100% after four years from the registration date. These periods are reduced by one year for projects qualified as Long-term Strategic Exports.

Further, VPUs will also have free availability of foreign currency from local or external financing disbursed after the enactment of the regime. Additionally, exchange regulations imposing restrictions or prior authorizations for accessing the currency market for repaying loans, interest, accessories, other financial debts, or repatriating direct investments by non-residents, or for paying dividends, profits, or interests to non-residents, will not apply to VPUs provided some requirements are met.

Stability

RIGI will grant eligible VPUs with regulatory stability in tax, customs, and exchange matters for their projects, ensuring that the incentives awarded will not be affected by their repeal or by the creation of more burdensome regulations. This stability will last for 30 years from the registration date.