On February 27, the Senate approved the Labor Modernization Law (the “Law”) with 42 votes in favor, 28 against, and 2 abstentions, which incorporates under Title XXIII the Incentive Regime for Medium-Sized Investments (“RIMI” or the “Regime”).
This is a new nationwide tax promotion regime aimed at encouraging Productive Investments that exceed the minimum investment amount established by the Law on Micro, Small and Medium-Sized Enterprises (“MiPyMEs”), both domestic and foreign.
For the purposes of the RIMI, Productive Investments are understood as those investments aimed at the acquisition, development, manufacture and/or importation of new movable assets (excluding automobiles), depreciable for income tax purposes, as well as the execution of works to be directly allocated to the development of productive activities within the territory of Argentina. The Law excludes from the regime investments in financial assets, portfolio investments, and inventory.
The minimum amounts established by the Law to access the Regime are as follows:
– Microenterprises: USD 150,000
– Small enterprises: USD 600,000
– Medium enterprises Segment 1: USD 3,500,000
– Medium enterprises Segment 2: USD 9,000,000
Certain assets are eligible for promotion regardless of the minimum investment requirement, namely:
– Irrigation systems and equipment.
– High energy-efficiency assets.
– Anti-hail netting for the agricultural sector.
– Livestock assets.
The Regime establishes two tax incentives:
– The application of an accelerated depreciation system for Income Tax purposes: It will be possible to choose between applying the general regime of the Income Tax Law or the accelerated depreciation regime established in the Law:
* Depreciable movable assets: in two equal and consecutive annual installments.
* Works: in equal and consecutive annual installments according to a useful life reduced to 60%.
* Irrigation, energy efficiency, livestock, and anti-hail netting: in a single installment.
* Depreciable livestock assets: in two equal and consecutive annual installments.
* Depletable assets (mines, quarries, forests and similar): increase of the depletion deduction through a coefficient of 1.6.
– The early recovery of VAT tax credits associated with the investments: The RIMI beneficiary may request the refund of the VAT tax credit arising from Productive Investments after three monthly tax periods have elapsed from the one in which its computation became applicable, without the need to wait for its offset against VAT debits.
The Revenue and Customs Control Agency (“ARCA”) will be responsible for the regulation, supervision, and enforcement of the regime, as well as for determining the applicable sanctions.
The Law establishing the Regime is pending enactment and publication by the Executive Branch in order to enter into force.
