Adopts new incentive regime for large investments

27 Jun 2024

On 27 June 2024, the Congress of Argentina passed Law No. 27,742, known as the “Ley Bases” (Bases and Starting Points for the Liberty of the Argentine People). Among other provisions, the Ley Bases establishes the incentive regime for large investments. This regime offers several incentives:

• Tax incentives: These include a fixed 25 per cent income tax rate, asset amortization incentives, VAT payment incentives, the ability to carry forward losses, and reduced dividend taxes (7 per cent, decreasing to 3.5 per cent after seven years).
• Exemptions from withholding income tax: These apply to international payments related to projects that qualify as "long-term strategic projects."
• Import and export tax exemptions: These include the free import of goods and the export of products without local provider mandates.
• Foreign exchange benefits: These include the unrestricted payment of dividends and interest in foreign currency, and partial exemptions from repatriating export proceeds (20 per cent after two years, 40 per cent after three years, 100 per cent after four years, with earlier exemptions for strategic projects).
• Free distribution of project products: This applies without local market preferences.
• Stability guarantee: A 30-year stability period for the incentive regime, with the option to adopt more favourable future rules.

These incentives apply to investments in the following sectors: forestry-industrial, tourism, infrastructure, mining, technology, steel, energy, oil, and gas. Public infrastructure concessionaires are also eligible.

To benefit from these incentives, an investment project must apply to the regime within two years, with a minimum project amount of $200 million. Additionally, at least 40 per cent of the investment amount must be made within two years of the date of project approval.

Ley Bases also introduces a new arbitration framework under the RIGI. According to Article 221, disputes related to qualifying investments between Argentina and investors in a RIGI project—including issues of execution, application, scope, or interpretation—must first undergo amicable consultation and negotiation. If unresolved within 60 days of notification, the investor may choose arbitration through the PCA (Buenos Aires seat, Spanish language), ICC, or ICSID. The Executive Branch may also establish tailored dispute resolution mechanisms for specific projects when approving applications and investment plans.

Nature of measure:

• Facilitation
• Incentives
• Other regulatory changes

Type:

• Promotion and facilitation (Investment facilitation , Investment incentives)

Industry:

• Primary (Agriculture, forestry and fishing, Mining and quarrying)
• Primary (Agriculture, forestry and fishing, Mining and quarrying)
• Manufacturing (Manufacture of coke and refined petroleum products, Manufacture of basic metals)
• Manufacturing (Manufacture of coke and refined petroleum products, Manufacture of basic metals)
• Services (Electricity, gas, steam and air conditioning supply, Water supply, sewerage, waste management and remediation activities, Construction, Transportation and storage, Accommodation and food service activities, Telecommunications)
• Services (Electricity, gas, steam and air conditioning supply, Water supply, sewerage, waste management and remediation activities, Construction, Transportation and storage, Accommodation and food service activities, Telecommunications)

Sources:

• Boletin oficial, LEY DE BASES Y PUNTOS DE PARTIDA PARA LA LIBERTAD DE LOSARGENTINOS, https://www.boletinoficial.gob.ar/detalleAviso/primera/310189/20240708, 08 Jul 2024
• Lexology, Argentina Passes Sweeping Economic Reforms: Deregulation, Privatizations, and Promotion of Private Investments in Large Projects, https://www.lexology.com/library/detail.aspx?g=0ffc36b3-12b6-4ad9-b801-b64a994a0390, 02 Jul 2024