The Argentine National Congress is evaluating a draft legislation to establish a new incentive regime for major investments by sole purpose vehicles in specific sectors.
The sole purpose vehicles for the new incentive regime include corporations, limited liabilities companies (LLCs), branches of foreign companies in Argentina, dedicated branches of local companies in Argentina, joint ventures, and other similar contractual agreements for joint associations.
The sectors that will initially come under this new incentive regime include agribusiness, forestry, infrastructure, mining, energy, gas and oil, petrochemicals, and technology. It is expected the government can expand the list to include more sectors in the future.
The main tax incentives of the regime are as follows:
- A corporate tax rate of 25%
- An exemption from withholding tax for dividends that are paid for three years after the fiscal year in which the underlying profits were generated.
- Interest deduction restrictions will not be applied for five years from the date of joining the regime.
- A VAT system that enforces VPUs to pay VAT, including import VAT, on the construction, acquisition, and/or development of fixed assets and infrastructure investments. This provision is also applicable for services received for these purposes.
- Introducing a 100% income tax credit to offset the tax on credits and debits in bank accounts (0.6%).
- All imports of raw materials, spare parts, capital goods, components, and more for use in the investment project will be exempted from customs duties, verifications and statistical fees, and provincial and national withholding taxes on imports.
