With the purpose of favoring the inflow of foreign currency funds for local economic growth, the Argentine Government issued Decree No. 234/2021 by means of which it created the Investment Promotion Scheme to Increase Exports.
Below you will find a summary of the Decree No. 234/2021’s main dispositions and the Investment Promotion Scheme to Increase Exports’ main aspects and requirements.
Eligible projects
Start-up of new productive projects and the expansion of existing business units in forestry, mining, hydrocarbon, manufacturing, and agro-industrial activities, involving a direct foreign investment in foreign currency not less than an amount of one hundred million United States Dollars entered through the official foreign exchange market, calculated at the time in which the relevant project is filed.
The Ministry of Economy and the Ministry of Productive Development will establish, for each activity, the requirements to qualify for an expansion of productive capacity under the terms of this regime.
Benefits
Free availability of up to 20% of exports proceeds from the relevant project, which can be allocated to (i) payment of principal and/or interest of commercial debts or financial liabilities with non-resident borrowers and/or (ii) payment of profits and dividends corresponding to closed and audited financial statements and/or (iii) the repatriation of direct investments of non-residents. In the case of the expansion of existing business unit, the Ministry of Economy and the Ministry of Productive Development will assess the incremental incidence (on an annual basis) of the proposed expansion in the exports of the relevant applicant. Such incremental will have the benefits of free availability according to the preceding paragraph criteria.
In the event that export proceeds are not allocated simultaneously upon collection to the above listed benefits, the beneficiary may keep such funds deposited in foreign currency abroad. The beneficiaries shall comply with the mandatory repatriation and conversion to Argentine Pesos with the remaining 80% of the export proceeds of the projects.
Limitations
This benefit may not exceed an annual maximum equivalent to 25% of the gross amount of foreign currency entered by the beneficiary in the official foreign exchange market to finance the development of the project and may be applied once one year has elapsed since the entry of foreign currency through the official foreign exchange market has become effective. To estimate the gross amount of foreign currency entered by the beneficiary through the official foreign exchange market to finance the project, foreign currency flows from exports will not be considered.
Foreign exchange stability period benefit term
The approved projects will obtain a foreign exchange stability for the term fifteen years as from the date of issuance of the Export Investment Certificate. During such stability period benefits granted under the Investment Promotion Scheme may not be affected by exchange regulations.
Exclusions
- Individuals and/or legal entities whose representatives or members of the board of directors have been convicted for any type of non-culpable crime, with custodial sentences or disqualification, during a period equal to twice the conviction has elapsed.
- Individuals and/or legal entities that at the time of granting the benefits had (i) tax or social security debts due and unpaid, or (ii) definitive and final judicial or administrative decisions declaring breaches to customs, exchange, tax or social security matters and imposing taxes, duties, fines, or surcharges.
- Individuals and/or legal entities who have failed to comply with obligations with respect to other existing promotion regimes or industrial promotion contracts.
- Projects involving exports of wheat, wheat flour, corn, corn flour, corn oil, corn pellets, corn preparations, soybeans, soybean meal, soybean oil, soybean pellets, soybean proteins, glycerol, and biodiesel.
If the applicants to the Investment Promotion Scheme have ongoing and/or pending proceedings for the crimes or breaches above referred, their application may be suspended procedure until their final resolution or judgment, considering the seriousness of the crime or infraction charged.
Application period
Applicants shall submit their submission to the Investment Scheme within three years, counted as from the entry into force of this decree, which may be extended by the Ministry of Economy and the Ministry of Productive Development for a similar period. The Ministry of Economy and the Ministry of Productive Development will issue implementing regulations to apply for these benefits.
This report cannot be considered as legal or any other kind of advice from Allende & Brea.
