Executive summary

On 6 March 2026, Argentina enacted Law No. 27,802 (referred to as the Labor Modernization Law or the Law) through publication in the Official Gazette.

Although the Law primarily introduces labor law reforms, it also incorporates significant tax amendments affecting income tax, value-added tax (VAT) and excise taxes, with the stated objective of reducing taxes in certain sectors and introducing technical adjustments aligned with current economic conditions.

The main tax updates incorporated by the Law are summarized below.

Income tax

The Law updates the tax loss carryforward mechanism, allowing tax losses generated in fiscal years beginning from 1 January 2025 to be adjusted for inflation, based on the variation of the General Consumer Price Index.

VAT

The Law reduces the VAT rate to 10.5% for electricity used in agro-industrial irrigation systems, with the objective of lowering energy costs for the agricultural sector. This measure applies from 1 April 2026.

Excise taxes

Effective 1 April 2026, the Law eliminates excise taxes for: insurance; mobile and satellite telecommunication services; luxury goods; motor vehicles and engines; recreational and sports vessels; and aircraft.

Regime for Incentives to Medium-Sized Investments

The Law introduces the Regime for Incentives to Medium-Sized Investments (RIMI), aimed at promoting productive investments by micro, small and medium-sized enterprises (MSMEs) in Argentina. RIMI grants tax incentives, including (1) accelerated depreciation for income tax purposes and (2) an expedited VAT refund mechanism for qualifying productive investments, subject to minimum investment thresholds, strict eligibility requirements and penalties in cases of noncompliance.

Implications

Companies operating in Argentina should assess the impact of the inflation-adjusted tax loss regime on their effective tax position, particularly in inflationary contexts. Businesses in the agro-industrial, automotive, insurance and telecommunications sectors should evaluate the possible benefits from the Law's VAT and excise tax relief measures. In addition, eligible MSMEs should evaluate potential opportunities under the RIMI.