On August 23, 2024, Decree 749/2024 (the “Decree”), issued by the National Executive Branch, was published in the Official Gazette of the Argentine Republic. This Decree regulates the Incentive Regime for Large Investments (“RIGI”), created by Law No. 27,742. The RIGI is designed to encourage investments in projects that are considered large long-term investments in Argentina, provided that they are developed in certain strategic sectors. To this end, it offers various tax, customs and exchange incentives, in addition to an effective system of rights protection and dispute resolution.
Main Points of the Decree:
- The decree clearly defines the sectors in which projects must be framed in order to be eligible for RIGI benefits. These sectors are:
- Forestry Industry: Projects where timber is the main input, including forest plantation.
- Tourism: Projects related to lodging and accommodation services.
- Infrastructure: Projects for the construction of structures, networks and systems necessary for logistics, transportation, recreation and the provision of public services or services of public interest.
- Mining: Mineral exploration and exploitation projects, as well as processes established in Law No. 1,919 and Law No. 24,196.
- Technology: Projects focused on the production of technological goods and services in areas such as biotechnology, nanotechnology, energy transition technologies, aerospace and satellite industry, nuclear, software, robotics, artificial intelligence and defense.
- Iron and steel: Projects for the industrialization and processing of iron, steel and their alloys.
- Energy: Projects for the generation, storage, transportation and distribution of electricity from both renewable and non-renewable sources, and the production of low-carbon energy and bioenergy.
- Oil and Gas: Activities related to the processing, separation, transportation, storage and export of hydrocarbons and natural gas, including offshore exploration and exploitation.
2. Minimum Investment Amounts (“MMI”): The decree establishes the minimum amounts of investment in computable assets required for each sector. The general MMI is USD 200,000,000, with some exceptions for certain oil and gas subsectors, which require higher investments, such as:
- Offshore exploitation and production: USD 600,000,000.
- Gas production for export: USD 600,000,000.
- Transportation and storage: USD 300,000,000,000.
- In the event that a project involves activities in more than one sector, the MMI corresponding to the main sector of the project will be applied. Expansions of existing projects can benefit from RIGI if they meet the requirements and reach the specific MMI.
3. Single Project:
Defines a “Single Project” as an “indivisible economic unit,” in which:
- The components of the project are interrelated in such a way that their exclusion would make the planned activities unfeasible.
- The activities are related and necessary for the development of the corresponding sector.
- The components are located within a radius of 200 km, with exceptions for transportation infrastructure and in approved cases due to lack of adequate infrastructure
4. An expansion is defined as a set of investments that increase the productive capacity of a project. If the expansion is carried out on a project already adhered to the RIGI, the same incentives apply without the need for additional authorization.
Long Term Strategic Export Projects (“PEELP”):
To qualify as PEELP, projects must demonstrate their potential to establish Argentina as a long-term supplier in a global market in which the country has little or no participation, with a minimum investment of USD 2,000,000,000,000 and details on the duration of each investment stage.
5. Suppliers:
The decree regulates the importation of goods by suppliers adhered to the RIGI, establishing restrictions and conditions to ensure the proper use of imported goods.
6. Application and Registration Authority:
The Ministry of Economy is designated as the RIGI implementation authority and will evaluate applications through a Project Evaluation Committee. Specific registries are created for projects and suppliers.
7. Foreign Exchange Incentives:
Regulates the free availability of foreign currency and access to the foreign exchange market for the payment of debts, dividends and repatriation of investments, subject to certain conditions established by the Central Bank.
8. Tax Incentives:
Includes a series of tax incentives such as a reduced income tax rate, special accelerated depreciation regimes, exemptions on foreign payments, among other benefits.
9. Customs Incentives:
Exemptions from import duties and other taxes are contemplated for capital goods and components required for projects adhering to RIGI, as well as benefits for exports.
10. Legal Stability:
Tax, customs, regulatory and foreign exchange stability is guaranteed for a period of 30 years for projects that are members of RIGI, protecting them from adverse legal changes.
11. Dispute Resolution:
Establishes that disputes will be resolved through international arbitration, under rules of institutions such as the ICC, PCA or ICSID, and creates the RIGI Panel as an additional option for dispute resolution.
This decree establishes a comprehensive framework to encourage large investments in strategic sectors in Argentina, providing a series of incentives and protections to ensure the success and sustainability of such projects.
