The new decree establishes a promotional regime for direct investments in foreign currency in specific economic activities.

On April 7, 2021, the Argentine Government published, in the Official Gazette, Decree 234/2021 (the Decree), which establishes a promotional regime for direct investments in foreign currency in certain activities. Under the regime, beneficiaries may apply a certain percentage of the foreign currency obtained from exports related to investments in certain activities to the payment of commercial or financial liabilities, dividends and the repatriation of nonresidents' direct investments. The promotional regime will apply for three years beginning April 7, 2021.

Activities covered by the regime

The promotional regime will include investments for the start-up of new productive projects in forestry, mining, hydrocarbon, manufacturing and agro-industrial activities. The promotional regime also will cover investments in existing business units that want to increase their production.

The Ministry of Economy and the Ministry of Productive Development (the Authority of Application) will determine which activities are covered by this regime.

Requirements and conditions

The Decree establishes that individuals and corporations, domiciled both in Argentina and abroad, will be eligible to apply for the promotional regime if they make direct investments in foreign currency of not less than US $100 million in the covered activities.

In addition, the Decree clarifies that beneficiaries of the regime must comply with investment and development plans, in accordance with the project terms and deadlines approved by the Authority of Application.

Taxpayers that have unpaid tax or social security liabilities are ineligible for the regime.

Benefits

The beneficiaries of the promotional regime may apply up to 20% of the foreign currency obtained from exports related to the approved project to one of the following:

• Payment of capital and interest on commercial or financial liabilities abroad
• Payment of dividends corresponding to closed and audited financial statements
• Repatriation of nonresidents' direct investments

This benefit may not exceed 25% of the gross amount of foreign currency entered into the Foreign Exchange Market (MLC for its Spanish acronym) by the beneficiary to finance the development of the project. Beneficiaries may apply the benefit after one year has elapsed from the date the foreign currency entered in the MLC.

The Decree also provides approved projects with exchange rate stability for a period of 15 years from the date of issuance of an Export Investment Certificate by the Authority of Application.

———————————————