October 28, 2021
Argentine Government extends the promotional regime for industrial entities located in Tierra del Fuego, Antarctica and Southern Atlantic Islands
The new decree extends until December 31, 2038, the promotional regime for industrial companies located in the Province of Tierra del Fuego, Antarctica and the Southern Atlantic Islands. The decree also requires companies to pay a monthly contribution on the sale of products linked to approved industrial projects.
On October 23, 2021, the Argentine Government published, in the Official Gazette, Decree 727/2021 (the Decree), which extends until December 31, 2038 the promotional regime for industrial companies that are located in the Special Customs Area of Tierra del Fuego, Antarctica and the Southern Atlantic Islands (the Special Customs Area) and have projects in the works as of October 23, 2021. The promotional regime may be extended for another 15 years beginning January 1, 2039, if certain conditions are met.
On May 16, 1972, Law No. 19,640 established the National Territory of Tierra del Fuego, Antarctica and the South Atlantic Islands as a Special Customs Area. Activities conducted in that area are totally or partially exempt from certain national taxes, such as income tax, value-added tax, excise duties and customs duties.
On September 14, 2007, Decree 1234/2007 extended the promotional regime outlined in Law 19,640 to December 31, 2023, for industrial entities with projects in force as of the publication date of that Decree.
The Decree extends until December 31, 2038, the promotional regime for industrial companies that are located in the Special Customs Area and have projects in the works as of October 23, 2021. The promotional regime may be extended for an additional 15 years beginning January 1, 2039, after the Decree has been in force for 12 years and provided that Brazil maintains the promotional regime in the Manaus Free Trade Zone.
Companies that did not begin their approved projects by October 23, 2021, will lose the regime's benefits. Benefits for the textile industry, however, will expire on December 31, 2023, unless extended by the Industry, Knowledge Economy and Foreign Trade Management Secretary of the Ministry of Productive Development (Authority of Application).
New projects to be included
New industrial projects or the readjustment of existing ones within the framework of Law No. 19,640 for the production of electronic products, components and related technologies may be submitted for approval until December 31, 2023. The new projects or readjustments, however, must not affect the production carried out in the National Continental Territory, and any goods must not be manufactured in the Special Customs Area as of October 23, 2021.
Industrial companies located in the Special Customs Area with projects in the works as of October 23, 2021, have six months from that date to express their willingness to adhere to the benefits and obligations established in the Decree before the Authority of Application.
Beneficiaries of the regime must make a monthly contribution equivalent to 15% of the benefits obtained from VAT on the sale of products linked to the approved industrial projects. That amount will be deposited in the Fund for the Expansion of the Fuegian Productive Matrix.
The Decree allows beneficiaries to reinvest up to 40% of the monthly VAT contribution in their own productive investment projects aimed at expanding the productive matrix and improving competitiveness. The Executive Committee of the Fund for the Expansion of the Fuegian Productive Matrix must have previously approved the projects. The investment projects, however, cannot be directly linked to the activities promoted by the present regime.
Beneficiaries that export goods manufactured in the Special Customs Area may request a reimbursement of 5% of the free on-board value of their incremental exports. Certain products produced by the oil industry would not qualify for the reimbursement.
Companies doing business in the Special Customs Area, as well as those companies willing to make investments in new industrial projects in the Argentine territory, should analyze the requirements and benefits of the new Decree.