RIGI Regulation: What you need to know about the Large Investment Incentive Regime

RIGI Regulation: What you need to know about the Large Investment Incentive Regime

Title VII of the Law of Bases and Starting Points for the Freedom of Argentines (Law of Bases) – which has already been regulated – creates the Large Investment Incentive Scheme (RIGI or “the Regime”) establishing incentives, certainty, legal security and a protection system of rights for the Private investments of USD200,000 or more, in a single project.

This is a model that seeks to encourage and promote private investment, both national and foreign, in projects that contribute to the development of the Argentine economy, to the execution of infrastructure works necessary for this purpose, to the generation of employment, and to the positioning of the country as a strategic supplier in global markets.

This Law considers large investments to the plans of the sectors of forest industry, tourism, infrastructure, mining, technology, steel industry, energy, oil and gas that involve the acquisition, production, construction and/or development of assets that will be allocated to activities and whose investment amount in computable assets is equal to or greater than two hundred million US dollars.

This Minimum investment amount must be completed before the deadline indicated in the investment plan. In principle, 40% of the committed investment must be fulfilled during the first two years from the date of approval, and the investments must be long-term.

However, the Executive Branch may establish minimum investment amounts in higher computable assets per productive sector or per productive stage, with a limit of US$900 million.

.Those investments that contribute to the positioning of Argentina as a new long-term supplier in global markets in which it does not yet have a relevant participation and are equal to or greater than US$1 billion They may be classified by the implementing authority as ‘Long-Term Strategic Export Projects’ and obtain differential benefits.

The term to join the RIGI will be two (2) yearsfrom the entry into force of the regime – extendable, once only, for a period of up to one (1) year – and is only available for Single Project Vehicles (SPV) to submit an investment plan and obtain approval from the implementing authority.

The VPUs must have the sole and exclusive purpose of carrying out one or more phases of a single project that qualifies as “great investment”. Commercial companies, branches of foreign companies, temporary unions (UTE) and other associative contracts, and dedicated branches may be considered VPUs.

Dedicated branches are those formed from a legal entity that carries out one or more activities that will not be part of the investment project, in order to ‘isolate’ the assets dedicated to it. They must be registered in the corresponding public registry, obtain a Unique Tax Identification Code (CUIT), register for the corresponding taxes independently and keep accounting separate from the company to which they belong.

These must have as their sole purpose the development of the investment project for which inclusion in the RIGI is requested. In addition, they must have allocated capital and have only the assets, liabilities and personnel that will be used for the investment project. All incentives and benefits obtained by joining the RIGI will only be enjoyed by the branch.

RIGI, a challenging regime

We emphasize that it is a broad and challenging regime, since it is not aimed at a single sector of the economy or a single region of the country and the tax benefits are not limited to certain taxes, but rather cover the entire tax, customs and exchange system.

Additionally, by declaring projects that qualify under the regime to be of “national interest” within the framework of our National Constitution, we seek to create a model that provides certainty, legal security and special protection to investors in the event of potential non-compliance by the public administration.

In this regard, the Executive Branch is emphasizing that there will be no “rule changes” and, therefore, the chapter on Fiscal Stability becomes relevant. It contains provisions that seek to provide the Regime with the legal security necessary to guarantee the stability of the benefits and rights granted to those who invest in these projects.

Thus, the VPUs will enjoy tax, customs and exchange stability for 30 years and cannot be affected by the repeal of this law or by the creation of regulations that are more burdensome or restrictive than those contemplated in the RIGI. In turn, the provinces and municipalities that adhere to it will not be able to impose new local taxes on the VPUs, except for remuneration rates for services actually provided.

Leading Tax Partner at Grant Thornton Argentina.

Source: Ambito

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