Regulation of the Incentive Regime for Large Investments

On August 23rd, 2024, the National Executive Branch published Decree No. 749/2024 (the “Decree”) in the Official Gazette, which regulated the Incentive Regime for Large Investments (“RIGI”). Through the Decree, the Ministry of Economy was designated as the Enforcement Authority of the RIGI, and the following registers for Special Project Vehicles (“SPV”) were created: 1) the SPV Register, 2) the Register of Strategic Long-Term Export Projects, and 3) the Register of Suppliers under the Incentive Regime for Large Investments. Furthermore, the process and procedure for the use and application of all incentives incorporated by the Basis Act were regulated and stipulated, along with the minimum investment amounts in computable assets by sector or subsector. The Decree established applicable guidelines for Large Investments within each sector:

i. Forestry Industry Sector: Activities whose main input for obtaining products is wood, including forest planting.

ii. Tourism Sector: Activities aimed at providing lodging and accommodation services.

iii. Infrastructure Sector: Activities aimed at the construction of:

1. 1. physical structures, networks, and/or systems, public and/or private, necessary for the operation of logistics and road, land, maritime, fluvial, port, or rail and airport transport;
   2. physical structures, networks, and/or systems, public or private, aimed at the development of recreational projects;
   3. physical structures, networks, and/or systems, public and/or private, necessary for the proper functioning of public services, as well as services declared of interest such as healthcare, health, education, telecommunications, and defense and security.

iv. Mining Sector: Activities of prospecting, exploration, development, preparation, extraction, and exploitation of mineral substances covered by Title I of Law No. 1,919, as well as processes covered by subsection b) of article 5 of Law No. 24,196.

v. Technology Sector: Activities primarily aimed at the production of technological goods and services, in biotechnology, nanotechnology, mobility based on new engine technologies and energy transition technologies, aerospace and satellite industry, nuclear industry, software industry, robotics industry, artificial intelligence, armament and defense industry.

vi. Steel Sector: Activities of industrialization and/or processing of iron ore, steel, and/or their alloys, to obtain products in primary forms and/or finished products.

vii. Energy Sector: Activities of generation; storage; transportation and/or distribution of electrical energy from renewable and non-renewable sources; production of other low-carbon energies; bioenergy; and the capture, transportation, and storage of carbon dioxide.

viii. Oil and Gas Sector: Activities related to:

1. 1. the construction of treatment plants, natural gas liquid separation plants, oil pipelines, gas pipelines, multipurpose pipelines, and storage facilities;
   2. the transportation and storage of liquid and gaseous hydrocarbons;
   3. petrochemicals, including the production of fertilizers, and refining;
   4. the production, capture, treatment, processing, fractionation, liquefaction of natural gas, and transportation of natural gas for the export of liquefied natural gas, as well as the infrastructure works necessary for the development of said industry; and
   5. the exploration and exploitation of offshore liquid and gaseous hydrocarbons.

It is important to note that, for a VPU to access the RIGI, a minimum investment amount is required, which in all cases will be USD 200,000,000, except for:

The Decree also defines and includes pre-existing projects within the RIGI, such as a project aimed at expanding a non-RIGI-affiliated project that results in an increase in the productive capacity of a pre-existing project and that: (i) qualifies as a Unique Project eligible for the RIGI; (ii) meets or exceeds the minimum investment amount, i.e., USD 200,000,000; (iii) is accompanied by a plan that demonstrates and commits to applying the RIGI incentives exclusively to the resulting production from the Expansion, which exceeds the installed capacity of the Pre-existing Project; and (iv) the corporate vehicle for the expansion maintains a separate accounting system from the original project or constitutes a Dedicated Branch whose sole purpose is the expansion of the Pre-existing Project, to keep a record of the incentives granted. The RIGI incorporates various incentives, certainty, and legal security, through tax, customs, and exchange benefits. The rights will be enjoyed retroactively from the day the adherence to the RIGI was requested, and the obligations will be assumed from the date the adherence certificate was issued.