Regime for the promotion of investments

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REGIME FOR THE PROMOTION OF INVESTMENTS

Complementary regulations were issued in relation to Decree No. 234/2021, aimed at attracting investments in productive sectors of high export capacity

The Ministry of Productive Development and the Ministry of Economy issued Joint Resolution No. 4/2021 (published in the Official Gazette on September 22, 2021) whereby certain supplementary regulations (the “Supplementary Regulations”) were enacted in relation to the implementation of the “Regime for the Promotion of Investment for Exports” (the “Regime for the Promotion of Investments”) established by Decree No. 234/21 of April 6, 2021 (the “Decree”) (click here to see our comment on said Decree).

Conceptual specifications about the Regime for the Promotion of Investments

Some of the most remarkable definitions included in the Supplementary Regulations as regards the Regime for the Promotion of Investments which specify its operation and scope state that:

a) The investments which shall be considered under the Regime for the Promotion of Investments shall be those which imply an improvement in the export capacity of the applicant, regardless of whether they lead to an improvement of the productive capacity for the domestic market (section 1).

b) The investment shall not only be evidenced by the inflow of foreign exchange in the Foreign Exchange Market, but also pursuant to the FOB price dispatched for import of capital goods produced abroad and imported to the country in order to be ruled by the Regime for the Promotion of Investments (section 2, 2.3.2.a.2);

c) The valuation of the investment made when the project for investment was submitted shall be considered pursuant to the estimation of the annual limit of the benefit set forth in section 8 of the Decree (section 2, 2.3. 2.a.2);

d) In the case of associative projects, the distribution of the benefits shall be proportional to the percentage of income of foreign exchange in the Foreign Exchange Market made by each company participating in the project (section 2, 2.3.2.c);

e) Notwithstanding that foreign exchange stability is granted for the term of 15 years, that would not prevent the enforcement authority from stablishing a shorter term for the use of the benefits; to that effect the following is set forth: “For the purpose of what is set forth in Section 9 of Decree No. 234/21, the term for the use of the benefit shall be determined in each case according to the kind of investment and the business plan submitted and approved” (section 4): and

f) The granting of the benefit of exchange stability in the Decree shall not affect the acquired rights that may correspond to the investor according to the regime applicable to the activity to which the project refers to (section 5).

Registration Requirements

Supplementary Regulations detail the formal requirements to be met by the applications submitted by investors interested in obtaining the benefit included in the Decree and provide, as regards the substantial description of the projects, that the following shall be included:

a) Description of the investment, identifying whether it is a new undertaking or the expansion of an existing one – in which case the increase in the productive capacity that is expected to be achieved and the exports expected as the result of the investment shall be indicated;

b) Valuation of the investment, certified by an independent body

c) Indication of: (i) the investment disbursement term and term for the entry of foreign currency through the Foreign Exchange Market; (ii) progress in the development of the project; (iii) estimated start-up dates for production and export; and (iv) tariff positions corresponding to the products to be exported.

d) In the case of extension of an existing undertaking, the following shall also be included: (i) exports made during the last 5 calendar years; and (ii) a well-founded evaluation of the percentage incidence as a consequence of the investment project in exports and a determination of the respective benefit; and

e) In the case of associative projects, the associated parties and the legal form they will adopt for this purpose shall be indicated.

To such general requirements, specific requirements will be added according to the type of activity to which each investment project refers, which will be detailed in the form that will be implemented in the future for this purpose for each of the activities included in the scope of application on the Decree (section 2, 2.3.1 and 2.3.2)

Creation of the Investment Project Evaluation Committee and decision about the origin of the applications

The Investment Project Evaluation Committee (the “Evaluation Committee”) is created, which will be made up of one representative from each of the following bodies: (a) Undersecretariat of Industry, dependent on the Ministry of Productive Development; (b) Undersecretariat of Mining Development, dependent on the Ministry of Productive Development; and (c) Undersecretariat of Regional and Sector Programming, dependent on the Ministry of Economy.

The Evaluation Committee will receive the proposal of the interested parties and, after the receipt of the technical report that the Central Bank of Argentina (“BCRA”) should gather regarding the impact on the foreign exchange balance, it will issue an opinion on the formal and substantial merits of the application.

The enforcement authority of the Regime for the Promotion of Investments will decide regarding the approval of the investment project within a term of 60 business days, as from the receipt of said opinion, extendable for another equal term.

Control and penalties regime

The Supplementary Regulations detail the information and control regime to which the investors shall be subject to, whose projects become admitted under the Regime for the Promotion of Investments (section 7, 7.2) and it also sets forth the penalizing regime that, in case of serious breaches, it shall give rise to the expiration of the benefit and to the obligation to integrate in the Foreign Exchange Market “those amounts of free availability which the company would have used until the moment of the penalty”, within a peremptory term of 90 days (section 4, 4.1).

Creation of the Registry of Investment Projects

Supplementary Regulations also include the creation of a Registry of Investment Projects in the orbit of the Ministry of Productive Development, where, particularly, approved investments projects and imposed penalties shall be registered (section 7, 7.3).

Please click here to access to the text of the Joint Resolution No. 4/2021 of the Ministry of Productive Development and the Ministry of Economy (available only in Spanish).

Please click here to access to the Decree No. 234/2021 (available only in Spanish).

For more information, do not hesitate to contact Pablo Alliani , Fernando Brunelli, María Inés Corrá and/or Cristian Galansky.