The recently enacted Law No. 27,742 (Official Gazette 07/08/24), known as the “Law of Bases and Starting Points for the Liberty of Argentines,” establishes in its Title VIII the Incentive Regime for Large Investments (RIGI) for projects in the sectors of forestry, tourism, infrastructure, mining, technology, steel, energy, and oil and gas. Through this regime, incentives, certainty, legal security, and a system to protect rights acquired thereunder are established for vehicles holding a single project that meet the requirements provided in said law.

It declares that “large investments under the RIGI regime” are of national interest and are useful and conducive to the prosperity of the country, and the progress and well-being of all provinces, the City of Buenos Aires (CABA), and municipalities, framing them within the scope of Art. 75, Inc. 18 of the Constitution regarding national prosperity, by virtue of which—in pursuit of certain goals, including the promotion of industry and the importation of foreign capital—the National Congress may establish temporary concessions of privileges.

Objectives: to incentivize large-scale domestic and foreign investments; promote economic development; increase exports of goods and services from activities developed under the regime; favor job creation; and generate predictability and stability for the large investments provided for in the RIGI.

Entities eligible to request adhesion to the RIGI: Single Project Vehicles (SPVs) holding one or more phases of a project that qualifies as a “Large Investment.” The SPVs must have the exclusive purpose of carrying out one or more phases of a single investment project admitted into the RIGI. They may not develop activities nor possess assets not assigned to said project.

The following shall be considered SPVs:

  • Corporations (S.A.), including Single-Member Corporations (S.A.U.), and Limited Liability Companies (S.R.L.);

  • Branches established by companies incorporated abroad;

  • Dedicated branches provided for in Art. 170 of the Law—belonging to a company incorporated abroad that develops more than one activity or possesses assets that are not part of the project—may establish a branch that must meet certain requirements: proper registration, independent tax ID (CUIT), assigned capital, and separate accounting, among others.

  • Joint Ventures (UTE) and other associative contracts.

Projects involving the acquisition, production, construction, and/or development of assets assigned to activities are considered “Large Investments,” provided they meet the following conditions:

  • Investment amount in computable assets equal to or greater than two hundred million dollars (USD 200,000,000).

  • Provide, for the first and second years counted from the approval of the investment plan, compliance with a minimum investment in computable assets to be defined by the Executive Branch in its regulations.

  • Be long-term investments, under the terms of the law.

Deadline for RIGI Adhesion: 2 years from the effective date of the regime. The Executive Branch may extend such validity for up to one additional year.

Tax Incentives: Income Tax:

  • SPVs adhered to the RIGI will be taxed at a 25% rate; the scale provided in Art. 73, Inc. a) of the Law (25%, 30%, 35% based on the tax base) shall not be applicable to their profits.

  • They will have a Special Depreciation Regime (Art. 183, Inc. b).

  • Tax losses suffered by SPVs in a fiscal period that cannot be absorbed by taxed gains in the same period may be deducted in subsequent years without a time limit. After five years without being absorbed, such losses may be transferred to third parties.

The income for individuals and undivided estates derived from dividends and profits (2nd category gains) and the remittance of profits from permanent establishments originating from SPVs adhered to the RIGI will be taxed at a 7% rate. After seven years from the date of adhesion, such dividends and profits will be subject to a 3.5% rate.

Payments made by SPVs holding projects declared as “strategic long-term exports” to foreign beneficiaries for maritime leases or charters, international transport services destined for exports, and for services included in engineering, procurement, and construction management (EPC) contracts, shall be exempt from Income Tax.

SPVs may compute 100% of the tax on bank account debits and credits as a credit against Income Tax.

VAT: When SPVs have been invoiced VAT (including tax perceptions) for the purchase, construction, manufacturing, processing, or definitive importation of fixed assets, or for investments in infrastructure works and/or services for their development and construction, SPVs may pay the VAT to their suppliers or to AFIP (in the case of goods importation) through the delivery of Tax Credit Certificates.

Customs:

  • Importations of new capital goods, spare parts, and consumer goods, as well as temporary imports carried out by SPVs, shall be exempt from import duties, statistical fees, destination verification fees, and any national and/or local tax perception, collection, advance, or withholding regime.

  • Exports for consumption of goods obtained under the promoted project, carried out by SPVs adhered to the RIGI, shall be exempt from export duties starting two (2) years from the date of adhesion to the RIGI.

  • SPVs adhered to the RIGI may freely import and export goods for the construction, operation, and development of said project, and no prohibitions, quantitative restrictions, quotas, or allotments of any kind may be applied to them.

Exchange Rate:

  • Export proceeds from the Project adhered to the RIGI carried out by SPVs are exempt from the obligation to repatriate and/or negotiate and settle in the exchange market at a rate of 20% after two (2) years from the SPV’s startup; 40% after three (3) years; and 100% after four (4) years. These funds shall be of free availability.

  • SPVs shall not be obligated to repatriate and/or settle in the exchange market foreign currency and/or any consideration corresponding to other items or concepts linked to the project, having free availability of the same.

The National State guarantees SPVs adhered to the RIGI full availability of the products resulting from the project, without the obligation of local market commercialization; full availability of their assets and investments; and the right to pay profits, dividends, and interest through access to the exchange market without restrictions and without the need for prior authorization from the BCRA.

Stability:

  • SPVs adhered to the RIGI shall enjoy normative stability in tax, customs, and exchange matters for the incentives granted by the law, which may not be affected by the repeal of the law nor by the creation of more burdensome or restrictive regulations than those contemplated in the RIGI for a period of 30 years from the date of adhesion by the SPV.

  • Taxes to be applied to SPVs adhered to the RIGI shall be those in effect at the date of adhesion with the modifications arising from the law, without the application of new taxes that may be created or increases in existing ones.

  • They may, however, benefit from the elimination of taxes or the reduction of rates that may be established in the future and that are more favorable.

It invites provinces, the City of Buenos Aires (CABA), and municipalities to adhere to the RIGI.

Provinces, CABA, and municipalities that adhere to the RIGI may not impose new local taxes on SPVs, except for service fees (rates) for services actually rendered.