Argentine legislation includes norms designed to encourage development in specific areas of the economy. This section current investment incentives:
Investment Incentives for Capital Goods and Infrastructure
Main Characteristics: On April 2008, the Executive Branch has implemented Law 26360 to grant investors the benefits of:
• Accelerated reimbursement of value added tax (VAT) paid on purchases of capital goods and other
materials related to investment projects; and/or
• Accelerated depreciation for machinery and equipment related to investment projects
• Accelerated depreciation reduces the tax burden during first years of the project.
Export-oriented projects and those that are environmentally friendly may apply for both incentives; for other types of projects, companies have to choose one. The law will be in force until September 2010.
For further information please contact http://www.infoleg.gov.ar
Exemption from Import Duties on Capital Goods
Regulatory Framework: Resolution Nº 8/2001 as amended, Decree 509/2007 and Resolution 15/2007 (MECON)
Main Characteristics: Tax-free imports of capital goods: resolution 8/2001 of the Ministry of Economy and Production sets a 0% import duty on a broad range of capital goods–most of these goods fall under chapters 84, 85, 86, 87, 89, 90 and 94 of Mercosur’s Harmonized Tariff System (HTS). The exemption applies only to
imports of new equipment.
For further information please contact Customs Administration http://www.afip.gov.ar
Reduced VAT on Capital Goods
Regulatory framework: Decree 493/2001, Decree 496/2001, Decree 615/2001, Decree 733/2001 and Decree 959/2001
Main Characteristics: Reduced VAT (10.5% compared to 21%) on the sale or import of finished capital goods and computer and telecommunications hardware (including parts and components).
For further information please contact Federal Administration of Public Revenue http://www.industria.gov.ar
Incentives for national production of capital goods, IT, telecommunications and agricultural machinery
Regulatory Framework: Decree 379/2001 as amended and Decree 2316/2008
Main Characteristics: The incentives regime for investment and national production of capital goods and agricultural machinery establishes a 14% reimbursement for local producers in the form of a fiscal bonus that may be used to pay VAT, income taxes, asset taxes and excise taxes.
For further information please contact Secretary of Industry, Trade and Small and Medium-Sized Enterprises http://www.industria.gov.ar
Import Regime for Large Industrial Investment Projects
Regulatory framework: Decree 256/2000 as amended
Main Characteristics: Zero tariffs for imports of capital goods that are part of an autonomous and complete production line. The regime allows to import spare parts up to 5% of the line’s FOB Value.
For further information please contact Secretary of Industry, Trade and Small and Medium-Sized Enterprises http://www.comercio.gov.ar
Import Regime for Used Capital Goods
Regulatory Framework: Resolutions 511/2000, 157/2003, 255/2003, 353/2004, 78/2006, 86/2007, 18/2007, 40/2008 and 42/2008
Main Characteristics: The regime allows imports of used capital goods classified under chapters 84-90 of the HTS. These goods will pay a reduced tariff of 6% compared to the common 28%, with the condition that they form part of an autonomous production line.
For further information please contact Secretary of Industry, Trade and Small and Medium-Sized Enterprises http://www.comercio.gov.ar
Temporary Import of Capital Goods
Regulatory Framework: Law Nº 22.415, Decree 1001/1982, and DGA Disposition 34/1998.
Main Characteristics: The regime allows the temporary importation of capital goods to a customs area, with a specific purpose and for a stipulated period of time. Once in customs, capital goods should be re-exported before the pre-specified due date.
For further information please contact Customs Administration http://www.infoleg.gov.ar
Sector Incentives
Regulatory Framework: Law Nº 26.393
Main Characteristics:
• Cash reimbursement: through Decree 774/05, the Argentine government implemented a program of fiscal benefits for vehicles produced domestically and that have imported parts whose value do not exceed 30% of the wholesale price of the final product. Specifically, a company manufacturing vehicles in Argentina will receive a cash reimbursement equivalent to 8% of the value of the locally produced parts being purchased. This percentage will be reduced to 7% in the second year of production and to 6% in the third year.
• The “Flex” Mechanism: Argentina and Brazil signed an agreement in June 2008 which was implemented in July 2008 and will be terminated in June 2013. The “flex” mechanism, which determines the level of bilateral trade flows that are tariff-exempt, was modified from US$ 2.6 of Brazilian imports for every US$ of Argentine exports to the current level of US$ 1.95. Tariffs will apply when this level is exceeded. The Common External Tariff (CET) was maintained between 14 and 16%.
• Trade with Mexico: In 2006, Argentina and Mexico eliminated all bilateral trade barriers in automobile trade. Furthermore, in June 2006 Argentina and Mexico eradicated hundreds of tariff items in the autoparts sector.
For further information go to http://www.industria.gov.ar
Software Industry Promotion Regime
Regulatory Framework: Law 25922 and Law 25856
Main Characteristics:
• Software design, development and production are considered to be industrial activities for tax or credit purposes and any other kind of benefits the national government may provide to the industrial sector. Law 25922 specifies the most important incentives for the software industry: • Ten year fiscal stability including national direct taxes, duties and special contributions, meaning a company’s aggregate national tax liability will not be increased over the mandated period once it is accepted into the program.
• Non-refundable and non-transferable fiscal credit for employer social security contributions paid (up to 70%), which may be used to pay federal tax liabilities, excluding the corporate income tax (CIT).
• A 60% reduction of a company’s CIT liability during each fiscal period will be granted if they can prove they have incurred expenses related to research and development and/or quality certification processes and/or export of software in the terms and conditions to be set forth.
• Exemption from import duties on hardware and IT components.
Requirements:
• More than 50% of the employees or the company’s total wage expenditures must be related to software development activities.
• Software development must be the company’s main activity (software developed for inhouse use is excluded from the benefits)
For further information please contact Secretary of Industry, Trade and Small and Medium-Sized Enterprises Ministry of Production http://www.industria.gov.ar
Promotion of State-of-the-Art Biotechnology Development and Production
Regulatory Framework: Law 26270
Main Characteristics: Law 26270 offers the following incentives on the research, development and production of biotechnology applicable to certain production processes:
• Accelerated depreciation of capital goods, equipment, parts and components
• Early reimbursement of VAT paid on the purchase of capital goods, equipment, parts and components.
• Listed property shall not be taxable under the minimum presumed income tax.
• Fiscal credit on employer’s social security contributions paid (up to 50%)
• Fiscal credit for purchases of research and development services from institutions under the science, technology and innovation national public system (up to 50%)
For further information http://www.infoleg.gov.ar
Biofuel Promotion Regime
Regulatory Framework: Law 26093, Executive Order 109/2007
Main Characteristics: The public sector recognizes Argentina offers opportunities for biofuel development and has provided a national law to promote biofuels (Law 26093 ruled by Decree 109/2007). Starting in 2010, the law establishes an obligatory blend of 5% of biodiesel for diesel fuels and of bioethanol for gasoline. The law also grants the following fiscal Incentives:
• Early reimbursement of VAT and/or accelerated depreciation allowance for capital goods and infrastructure
• Exemption on the minimum presumed income tax (tax paid on a company’s estimated annual revenue and that can be deducted at time of the CIT submission) for the first three years
• Exemption on the hydro infrastructure tax and the liquid fuels and natural gas tax.
For further information on technical aspects contact the Ministry of Federal Planning, Public Investment and Services http://www.minplan.gov.ar
For further information on taxation issues contact the Federal Administration of Public Revenue
Mining Promotion Regime
Regulatory Framework: Law 24196, Law 25429, Law 25161, as amended. Law 1919, Executive Order 456/1997, Law 25225
Main Characteristics: It offers the following fiscal incentives for mining activities:
• Double deduction of exploration expenses: including feasibility studies, prospecting, exploration, special studies, pilot plant tests, applied research and other tests.
• VAT reimbursement: VAT credits on all exploration expenses will be reimbursed after a twelvemonth period. Also, there are extraction and production incentives:
• Fiscal stability: once a company’s feasibility study is submitted to and approved by the National Mining Authority, a 30-year fiscal stability period will be granted.
• Accelerated depreciation: investment made on equipment, construction and infrastructure can be depreciated during the first three years of operations. Fixed assets, including machinery, vehicles and facilities can be depreciated at one-third of their value per year beginning with the startup year.
• Duty exemptions on imports: registered mining companies are exempt from any import duty or tariff on capital goods, special equipment or parts and any inputs to be used in the development of the mining process. Companies in mining-related services may also apply for this benefit.
• Tax exemptions and deductions: earnings derived from mining rights that are used to increase equity are exempt from CIT. In addition, companies are exempted from the minimum presumed income tax. Also, firms may have access to tax exemptions at provincial and municipal levels.
• VAT refund: applies to the purchase or import of new capital goods and investment in
infrastructure to be used as part of the mining production process.
For further information contact the Office of the Secretary of Mining & Ministry of Federal Planning: http://www.mineria.gov.ar
Forestry Regime
Regulatory Framework: Law 25080, Law 25509
Main Characteristics: Law 25080 grants the following fiscal and economic benefits to forestry-related investments:
• Fiscal stability: a 30-year period of fiscal stability is granted by the national government. This 30-year period may be extended an additional 20 years.
• Accelerated Depreciation: investment in equipment, construction and infrastructure can be depreciated during the first three years of operations. Fixed assets, including machinery, vehicles and facilities can be depreciated at one third of their value per year beginning with the start up year.
• VAT refund: applies to the purchase or import of goods or services to be used in the production process.
• Non refundable financial aid: companies that own less than 500 hectares can receive non refundable financial aid on a per hectare basis, in an amount that depends on the region, tree specie and the specific forestry work to be performed.
For further information got to http://www.sagpya.gov.ar
Hydrocarbon Exploration and Exploitation Incentive Program
Regulatory Framework: Law 26154
Main Characteristics: All the areas granted under Law 25943 and those with a geological potential over which there
are no current third-party rights granted by Law 17319 are part of the promotion system. They
follow the categorization below: areas in the continental shelf, 15 years; areas in non-developing
sedimentary basins, 12 years; areas in developing sedimentary basins, 10 years.
The benefits of the current system are:
• Early VAT refund: the early credit or refund provided for by Law 25924 will be applicable to the total amount of expenditure and investment made during the exploration phase and investments made during the exploitation phase.
• Income Tax: all expenses to be capitalized and investments made during the exploration phase and the investments made during the exploitation phase will be depreciated in three annual identical and consecutive portions, counting from the year when such expenditure and investment were incurred and made.
• Assets belonging to companies with exploration permits and exploitation concessions granted under this law will not be considered in the calculation of the taxable base for the minimum presumed income tax for a maximum of three years as from the award date.
• Exemption from payment of import duties and any other duty, levy or rate for imports of capital goods not manufactured in Argentina that are necessary for exploration.
For further information contact Secretary of Energy and Mining http://www.minplan.gov.ar
Public Infrastructure Works
Regulatory Framework: Executive Orders 966/2005 and 967/2005
Main Characteristics: Two alternative plans have been defined to promote private involvement in infrastructure works to promote investment in infrastructure in the country.
• National Regime for Private Initiatives: to promote private capital involvement in the execution of public infrastructure works, concessions, public utilities or licenses. Submission of projects is spontaneous and, should the government consider a proposal to be of public interest, it will call for bids. The particularity of this regime is that whoever proposed the project has first priority to be awarded the bid.
• Regime for Private-Public Cooperation: the government becomes involved in projects as a partner. The association can take any form permitted under Argentine legislation. The government’s contribution can be realized through a cash injection, tax benefits, rights granted to public assets or other assets pertaining to government ownership, etc. In this case, projects are presented by government agencies and bids are called to select the private partner.
For further information go to http://www.infoleg.gov.ar
Provincial and Regional Incentives
It is possible to obtain fiscal incentives under promotional schemes sponsored by various provincial governments. There are differences among these regimes but generally they take the form of a waiver, exemption or reduction in local taxes (turnover tax, stamp duty and real estate tax), support for infrastructure and equipment purchases, and/or preferential treatment for the purchase, rental or lease of public property.
Access to these regimes is evaluated on a case-by-case basis with each specific provincial government. At the same time, provinces have business support infrastructure such as industrial parks.
Free Trade Zones (FTZ)
Regulatory Framework: Law 24331 as amended
Main Characteristics: Free Trade Zones offer exporters the possibility to import the necessary equipment to build a “turnkey operation” within the FTZ free of customs duties, statistical fees and VAT. Furthermore, exporters manufacturing within the FTZ enjoy the benefit of buying supplies and raw materials from
third countries without having to pay duties.
By exporting through a FTZ, companies not only are exempt of all export duties but also they enjoy all other available incentives at the national level. In addition, companies operating in a FTZ may face lower production costs, due to the VAT exemption and lower internal taxes on utilities such as electricity, gas, water, and telecommunication.
Currently, there are FTZs in Buenos Aires (La Plata), Córdoba (Córdoba), Chubut (Comodoro Rivadavia), La Pampa (General Pico), Mendoza (Luján de Cuyo), Misiones (Puerto Iguazú), Salta (General Güemes), San Luis (Justo Daract), and Tucumán (Cruz Alta).
For further information contact Secretary of Industry, Trade and Small and Medium-Sized http://www.comercio.gov.ar
Innovation and technological development incentives
Main Characteristics: It supports projects designed to improve productivity in the private sector through technological innovation. There are various funding facilities available through public calls for applicants or permanent window submissions.
For further information contact National Promotion Agency of Science and Technology http://www.agencia.mincyt.gov.ar
Software Industry Fiduciary Fund (FONSOFT)
Main Characteristics: The fiduciary fund created by Law 25922, grants credits to:
• Research and development programs, related to activities included in the Software Promotion Regime (software systems design, development, production and implementation)
• Tertiary or high-level training programs
• Programs intended to improve the quality of design, development and production of software processes
For further information contact the National Promotion Agency of Science and Technology http://www.agencia.mincyt.gov.ar
Scientific and Technological Research Fund (FONCYT)
Main Characteristics: The fund supports research projects aiming to create new scientific knowledge and technological
know-how. There are various promotion instruments and funds awarded, in all cases, through government bids for applicants.
For further information contact the National Promotion Agency of Science and Technology http://www.agencia.mincyt.gov.ar
Federal Science and Technology Council (COFECYT)
Main Characteristics: COFECYT promotes a harmonious development of scientific, technological and innovative activities nationwide. The council has various funding facilities available: institutional strengthening projects; federal production innovation projects (PFIP); federal projects for productive innovation-productive interlinking (PFIP-ESPRO).
For further information go to http://www.cofecyt.secyt.gov.ar
Promotion and Encouragement of Technological Innovation
Main Characteristics: The National Executive Branch annually sets out a quota of tax credits that can be used to pay national taxes (income tax), for an amount no higher than 50% of the project’s total investment, and are to be used in equal parts over a three-year period. Furthermore, contributions from the National Treasury can be provided, which will be awarded to be paid back without accruing interest.
For further information go to http://www.mincyt.gov.ar
Main Employment and Training Incentives
Benefits for Hiring New Employees
A company hiring a beneficiary of the Employment and Training Insurance (ETI) could deduct from the worker’s net salary the amount received in the form of ETI. In addition, there will be a reduction in employer’s contributions given that those will be calculated based on the salary actually paid by the company, not including the amount covered by the ETI.
Amounts to the deducted for those benefiting from ETI:
1. Up to 45 years old:
• Women: AR$400 from months 1 through 3 and AR$600 from months 4 to 6.
• Men: AR$400 during the first 6 months
2. Older than 45 years old:
• Women: AR$400 from month 1 to 3; AR$600 from month 4 to 6; and AR$800 from months 7 to 9.
• Men: AR$400 during the first 9 months.
Program for More and Better Employment (YPMBE)
A company hiring a beneficiary of the Young’s Program for More and Better Employment (YPMBE) could deduct from the
worker’s net salary an amount of AR$400 which will be paid by the ML in the form of direct payment for a period of 6
months.
Benefits for Training People
A company providing training to a beneficiary of the Employment and Training Insurance (ETI) could deduct from the worker’s
net salary the amount of AR$400 to be paid directly by the ML. In addition, the ML will reimburse AR$150 for 4 hours/trainer
in a monthly basis and AR$225 for 6 hours/trainer/month during the whole training period.
Fiscal Credit
A company may obtain up to a AR$300,000 fiscal credit (Fiscal Credit Certificates) when incurring expenses related to
strengthening the skills of employed and unemployed workers. In case of a small and medium size enterprise (SME), the
fiscal credit would amount to 8% of the total amount paid in annual wages and salaries, including employers’ contributions.
For large enterprises, the fiscal credit will amount to 8 per thousand of the total amount paid in annual wages and salaries,
including employers’ contributions.
Training Qualifying for the Benefits:
• Professional Training
• Basic Concepts in Information Systems
• Certification of primary, secondary, tertiary, and superior education programs
• Evaluation and Certification of specific skills
• On the job training
Sector Trainning
A company may design a customized training program to satisfy its own needs and that will be in line with sector needs. In
that case, the ML could cover the cost of hiring trainers, teaching materials, equipment, and travel, among other items.
Financial programs
Main Characteristics: Banco de la Nación Argentina, the national bank, grants credit lines to SMEs, including credits to purchase capital goods, working and investment capital (to cover production and sales expenses); financing of imports and tourism (including the construction of new hotels, facilities and equipment). It also provides leasing and sale and factoring services for SMEs.
Agency: Banco de la Nación Argentina http://www.bna.com.ar
Credit Lines for Investments from the Investment and Foreign Trade Bank (BICE)
Main Characteristics: BICE’s objective is to promote productive investments and Argentine companies’ foreign trade. BICE, among other things, grants credit lines to purchase imported and local capital goods, and provides financing for assets and service investment projects, as well as productive upgrading.
Agency: Banco de Inversiones y Comercio Exterior http://www.bice.com.ar
Federal Investments Fund
Main Characteristics: A financial instrument of the Federal Investment Council (CFI) designed to assist the private sector through credit lines for the deployment of specific projects or programs at pre-investment and investment stages.
Agency: Consejo Federal de Inversiones (Federal Investment Council) http://www.cfired.org.ar
Government-Subsidized Credit
Main Characteristics: To facilitate SMEs’ access to credit, the government has created a system through which it takes over part of the financial cost of loans banks grant to Argentine SMEs.
Funding may be allocated to:
• Purchasing new capital goods by means of a loan or a lease and sale facility, to working capital, the prefinancing and funding of asset and service exports.
• Creation and development of new ventures
• Industrialization of assets and services developed through technological innovation.
• Scientific and technological research, production upgrading and innovation.
For further information please contact: http://www.sePyME.gov.ar
National Development Fund for Micro, Small and Medium-sized enterprises (FONAPyME)
Main Characteristics: The objective of the National Development Fund for MiSMEs (FONAPyME) is to make capital investments and provide medium and long term funding. It is designed for the existing or future micro, small and medium-sized enterprises and other partnering efforts. Loans are multi-sector allocated and investments are intended for brand-new and used fixed assets, as well as for working capital for projects. They are oriented toward the domestic market, especially emphasizing import substitution with a high impact on regional development, job creation and added value.
For further information please contact: http://www.sePyME.gov.ar
Export promotion
Regulatory Framework: Executive Order 1011/1991, Executive Order 2275/1994, Executive Order 690/2002.
Main Characteristics: The export refunds consist in the total or partial refund of amounts withheld paid at the various production and trading stages for locally manufactured brand-new goods to be exported. This is compatible with other export promotion systems. The VAT credit refund for purchases linked to exports may be recovered through one of the following mechanisms:
• Offset: against own debits produced by transactions in the domestic market.
• Accreditation: against other tax liabilities generated by transactions and owed by the exporter as taxes to DGI (Internal Revenue Service).
• Transfer: of the VAT credit to another taxpayer.
• Refund: in cash or in securities.
For further information contact Customs Administration http://www.afip.gov.ar
Draw Back
Regulatory Framework: Executive Order 177/1985, Executive Order 1012/1991, Executive Order 2182/1991, Resolution 177/1991, Resolution 288/1995, Resolution 1041/1999, Executive Order 313/2000.
Main Characteristics: This system allows for the total or partial recovery of customs duties and VAT paid for imported goods that have been industrially improved and exported for consumption in third countries.
For further information contact Customs Administration http://www.afip.gov.ar
Temporary import admission for industrial improvement purposes
Regulatory Framework: Executive Order 1330/2004 as amended.
Main Characteristics: The temporary import without payment of customs duties of goods which are to be industrially
improved, subject to the requirement the goods be re-exported in the new resulting form of the item for consumption overseas.
For further information contact Secretary of Industry, Trade and Small and Medium-sized Enterprises http://www.comercio.gov.ar
Turnkey Export Contract
Regulatory Framework: Law 23101, Executive Order 870/2003, Resolution 12/2004.
Main Characteristics: Exports in the turnkey fashion (including related services) receive a predetermined reimbursement.
For further information contact the Office of the Secretary of Industry, Trade and Small and Medium-Sized Enterprises http://www.comercio.gov.ar
Factory Customs (RAF)
Regulatory Framework: Executive Order 688/2002, Executive Order 2722/2002, Joint Resolution 14/2003 – 1424/2003, Joint Resolution 54/2003 – 1448/2003, Resolution 1553/2003.
Main Characteristics: The Factory Customs System (RAF) provides for a more straightforward and expanded temporary imports system. It allows companies under the system to import certain goods and add them to products for export, re-exporting them without any transformation or importing them for
consumption, paying no taxes until the transactions are complete.
For further informationcontact the Federal Administration of Public Revenue, Office of the Secretary of Industry, Trade and Small and Medium-Sized Enterprises
http://www.afip.gov.ar
In-House Customs
Regulatory Framework: Resolution 596/1999, Resolution 800/2000, Resolution 14/2003.
Main Characteristics: Under this regime, goods can be imported or exported directly from the company’s warehouse. The payment of duties and tariffs is made when goods leave the warehouse to be imported for consumption or when they are exported. The company is required to have a pre-specified sales volume and a clean fiscal track record to apply for the benefits.
For further information contact Customs Administration http://www.afip.gov.ar
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