The Bases Law 27.742 grants a prominent place to the so-called Large Investment Incentive Scheme (RIGI)in its Title VII.
Since the Decree designates the Ministry of Economy of the Nation As the Enforcement Authority of the RIGI, we must now await the corresponding regulations for its full validity and operation, including the requirements of the Registry of Suppliers of the Regime created by Article 2 of its Annex I.
Recipients of the Regime are the Single Project Vehicles (VPU), who can adopt various corporate forms, which direct their projects towards the authorized sectors: forest industry, tourism, infrastructure, mining, technology, steel industry, energy, oil and gas.
Among the conditions that the aforementioned projects must meet, the minimum amount of eligible investment stands out: it cannot be less than US$200 million, and must be disbursed in a proportion of no less than 40% during the first 2 years of the project.
RIGI and suppliers: What are the benefits?
The RIGI grants a wide range of tax incentives, including a reduction of the Income Tax to 25%, the refund of VAT balances in favor within a maximum period of 3 months, and the calculation of 100% of the check tax, customs and exchange benefits, among others.
The Bases Law, in its Article 176 inc. l, establishes that each project adhering to the RIGI must have a “Local Supplier Development Plan” which, as a minimum, includes contracts for 20% of the investment amount destined for suppliers, covering both the construction and operation stages of the project.
This point was regulated days ago by the National Executive Branch through its Decree 749/2024. This rule determines that the Local Supplier It may be any natural or legal person that meets the following requirements (Art. 3, paragraph f of Annex I): be incorporated and domiciled in the country and, in the case of companies, that at least 51% of its share capital is owned by natural and/or legal persons with tax domicile in the country.
Its purpose, on the other hand, must be to provide services or goods of national origin for one or more Single Project Vehicles (VPU), as defined by the same Base Law. It is worth mentioning that the cited Decree separately establishes specific conditions for suppliers of imported goods or services (Art. 8 and following).
What are the requirements to join the RIGI?
In turn, in Art. 47 of Annex I, the Decree in question sets out the requirements that VPUs must meet to join the Regime.
Among them, it refers to the Local Supplier Development Planspecifying that it implies a commitment to hire local suppliers for the supply of goods and works for at least 20% of the investment amount, both in the construction and operation stages, provided that there is availability and market conditions of price and quality.
Likewise, the VPU is requested to indicate, in its application for membership, the total amount of its contracting of local and foreign suppliers for the provision of goods and works for the development of the Unique Project.
Article 49 of Annex I also determines that anything provided by companies linked to the acquiring VPU is not included in the aforementioned 20%, except in the case of sole suppliers.
Which industries could benefit the most?
By limiting the aforementioned 20% to the provision of goods and works, thus excluding services, the measure favors the manufacturing industry and construction industrya circumstance of special relevance for these productive sectors.
Finally, Article 51 of Annex I provides details on the issues of market price and availability to be taken into account in relation to suppliers.
As for market value, it is established that it must be below the CIF value plus tariff of its equivalent in imported merchandise; while availability is defined as the supplier’s capacity to fulfill the supply in a quantity, time and form acceptable for the VPU in question, without generating unnecessary delays compared to the potential supply from abroad.
These demands are likely to lead, in turn, to new investments by numerous Local Suppliers that must meet the demand from VPUs, including plant expansions, investments in assets and consulting to achieve greater efficiency and scalability to be able to meet this requirement.
Therefore, these same VPUs could finance the value chain of the productive sectors involved, through advances, among others, which is why it is a development opportunity for said sectors.
Nothing is mentioned about the sector SMEsdifferentially. That is, they will fall within that percentage without any conditions of preferential treatment a priori, which is why we will have to continue waiting to see if the sector will have a special regime of “MINI RIGIE” in the future, although it is not a “mirror” regime of the RIGI in that it would not contemplate a minimum investment amount, it would include a set of benefits for MSMEs such as accelerated amortization of assets in use, among other differential benefits.
Text co-authored with Ricardo Proganó (Director of Corporate Finance) SMS Buenos Aires.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
