June 15, 2023 Argentine Government issues regulations for the promotional regime of investments in the automotive and auto parts industry
On 29 May 2023, the Argentine Government published, in the Official Gazette, Decree 281/2023 (the Decree), which provides regulations for a promotional regime to encourage investments in the automotive and auto parts industry and its value chain. Background On 19 September 2022, Argentina enacted Law 27,686, which establishes a promotional regime to encourage investment in the automotive and auto parts industry. The promotional regime provides tax incentives for new investments from companies located in Argentina that produce goods directly related to the automotive industry (automobiles, trucks, engines, auto parts systems, among others). The tax incentives provided in the promotional regime include: (i) an exemption from duties on the export of certain goods until 31 December 2031; (ii) the possibility to request a value added tax refund stemming from investments performed under the regime that have not been credited after three consecutive tax periods; and (iii) the option for accelerated tax depreciation of movable property in three consecutive annual installments. The start-up period for investment projects approved by the Secretariat of Industry, Knowledge Economy and External Trade Management of the Ministry of Productive Development (Authority of Application) must end no later than 31 December 2029. Decree 281 Eligible investment projects The Decree states that to be eligible for the promotional regime, new projects must comply with the minimum investment amount to be established by the Authority of Application for each specific asset and/or activity. To comply, amounts to be included in the minimum investment limit include investments in machinery and equipment, molds, dies or other instruments, fixed installations for processes, tests and trials and/or infrastructure work necessary to manufacture the product or improve the manufacturing process net of taxes, financial expenses, discounts and/or rebates. The Decree also establishes the specific percentages to be considered for each type of asset/activity to be understood as a new project or significant redesign of the existing projects, eligible for the promotional regime. Technical report Compliance with the requirements of the promotional regime must be demonstrated by obtaining a technical report from:
Exemption from export duties The Decree includes the list of tariff codes for goods that will be subject to 0% in duties on exports until 31 December 2031. Audit The beneficiaries of the promotional regime will be subject to audits by the Authority of Application to verify compliance with the obligations under the regime. The cost for verification activities and control of the regime shall be borne by the respective beneficiaries through the payment of a fee, which may not exceed 1% of the amount of benefits received. Implications Multinational groups in the automotive and auto parts industry interested in doing business in Argentina should evaluate this promotional regime and the potential benefits on their operations. ____________________________ For additional information with respect to this Alert, please contact the following: Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor | ||||
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