On December 28, 2022, Decree No. 853/2022 was published in the Official Gazette of the Nation, approving the regulation of Law No. 26,270 “Development and Production of Modern Biotechnology” and its amendment, Law No. 27,685 “Promotion of the Development and Production of Modern Biotechnology and Nanotechnology”. In turn, Decrees No. 50/2018 and 289/2021, which regulated them up to the present, were abrogated.
The aforementioned laws define biotechnology as: “any technological application that, based on rational knowledge and scientific principles derived from biology, biochemistry, microbiology, bioinformatics, molecular biology and genetic engineering, uses living organisms or parts derived from them to obtain goods and services, or for the substantial improvement of production processes and/or products”. Nanotechnology is understood as “any technological application of the set of techniques and sciences in which materials, substances and devices of nanometric dimensions are studied, manipulated and obtained in a controlled manner, which present special properties exclusively due to their size of less than one hundred nanometers (100 nm) in one or more dimensions”.
Both are key activities for the productive development of various sectors of our country’s economy. Therefore, Law No. 26,270 and its amendments grant a series of benefits for human or legal persons incorporated in Argentina who submit research and development projects based on the application of modern biotechnology and/or nanotechnology. The accelerated depreciation in income tax for capital goods, special equipment, parts or components of such goods, new, acquired for the promoted project, the early refund of value added tax and the conversion into tax credit voucher of fifty percent (50%) of the expenses for the hiring of technical assistance services, research and/or development with relevant entities of the National System of Science, Technology and Innovation are examples of the benefits provided by law.
Within this framework, Article 1 of the regulation stipulates that the following shall be considered promoted actions:
- The execution of scientific and technological research projects oriented to the productive development of modern biotechnology and/or nanotechnology;
- Execution of biotechnological and/or nanotechnological research and development projects focused on technology transfer;
- The development of new technologies, products, services, processes and/or productive improvements within the sector of modern biotechnology and/or nanotechnology;
- The incorporation of modern biotechnology and/or nanotechnology throughout the production process and/or;
- The analysis of social, environmental and productive impact in the implementation and/or incorporation of new technologies, products and processes of the biotechnology and/or nanotechnology sector.
The benefits foreseen for the aforementioned actions are listed in Chapter II of the law. They are not mutually exclusive and may be granted concurrently, as long as the benefited goods or expenses do not benefit from another national promotion regime. The beneficiaries will be subject to annual audits by the application authority, which according to the last modification of the Law of Ministries by Decree No. 451/2022, is the Ministry of Economy.
The regulation establishes that a call for projects will be made through the actions established by the authority, which, in turn, will establish the procedure for the analysis of the projects and the selection mechanism. If a project is approved, it will be registered in the National Registry for the Promotion of Modern Biotechnology or in the National Registry for the Promotion of Nanotechnology, depending on the nature of the project.
El beneficiario podrá optar por cualquiera de los dos registros, en el caso de que el proyecto seleccionado contenga ambas actividades. Asimismo, el proyecto aprobado para el otorgamiento de los beneficios previstos en la ley permanecerá registrado hasta que la autoridad considere que se han cumplido todas las etapas que lo componían. The beneficiary may opt for either of the two registers, in the event that the selected project contains both activities. Likewise, the project approved for the granting of the benefits provided for in the law will remain registered until the authority considers that all the stages that comprised it have been completed. After that, the holders may participate in new calls for bids to obtain the extension of the original project in relation to the acquisition of new assets or the incurrence of greater expenses. To this end, a simplified registration system is provided for, which will be exclusively for beneficiaries who have projects in force at the time of requesting such abbreviated procedure. Assets that replace those already granted benefits may not be included in the applications for additional benefits.
In addition, Article 10 of the Regulations provides for a tax credit voucher equivalent to 50% of the expenses actually paid for the hiring of technical assistance, research and/or development services within the framework of such projects for beneficiaries with approved research and/or development projects. Said bond shall be transferable only once, under the terms provided by the Federal Agency of Public Revenues (AFIP) and may be applied by the beneficiaries and/or assignees thereof, for a term of TEN (10) years as from the date of its issuance. After this period, any credit balances that may have been generated will in no case give rise to their recognition or refund by the State.
AFIP will establish the necessary mechanisms and conditions for the beneficiaries to prove compliance with their tax and social security obligations and will provide the Authority of Application with the tax and social security debts of the potential beneficiaries, in order to analyze the projects submitted and verify compliance with the conditions of access and permanence established in Law No. 26,270, as amended.
As regards the costs arising from the activities of verification and control of the operation of the system provided for, such costs shall be borne by the respective beneficiaries, who shall pay a fee calculated on the amount of the tax benefits approved, which may not exceed 7% (seven percent) of the total.
On the other hand, the regulation establishes the formation of the Advisory Commission for the Promotion of Biotechnology and Nanotechnology, created by Article 21 of the law. Members representing the provinces and the Autonomous City of Buenos Aires must come from federal councils and members representing the private sector must belong to associations, chambers and/or foundations. In both cases, they shall be chosen by the application authority. The authority shall also regulate the operation of the Commission and establish the procedures for the designation of its members.
Finally, Article 13 of the Regulations regulates the infringements to Law No. 26,270 as amended, among which are the lack of accreditation and/or presentation of the required documentation in the form and/or terms established by the Authority of Application or the lack of veracity of the same, the failure to maintain the requirements for obtaining the benefit or benefits and the abandonment of the approved project without a notification that justifies it. In turn, failure to comply with the requirements for the allocation of capital assets for approved projects, failure to comply with the requirements and/or observations made by the Authority of Application or failure to comply with the obligations set forth in the decree and/or the complementary rules issued for such purpose shall constitute non-compliance.
This report cannot be considered as legal or any other type of advice from Allende & Brea.
