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Argentina Extends Incentive Regime for Development and Production of Biotechnology and Expands Regime to Nanotechnology — Orbitax Tax News & Alerts

Argentina has published Law 27.685 of 16 September 2022, which extends and amends the incentives provided under the regime for the development and production of modern biotechnology introduced by Law 26.270 of 4 July 2007, including the extension of incentives to also cover nanotechnology. As amended, the law (regime) to promote the development and production of modern biotechnology and nanotechnology is in force until 31 December 2034.

As part of the amendments the following new definitions are provided:

  • Modern Biotechnology is understood as any technological application that, based on rational knowledge and scientific principles 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 have special properties granted exclusively by their size less than one hundred nanometers (100 nm) in one or more dimensions; and
  • A product or process will be considered biotechnologically or nanotechnologically based when, in order to obtain or perform it, the elements described above are an integral part of said product or process and, furthermore, their use is essential to obtain that product or for the execution of that process.

The potential beneficiaries of the regime are revised to include individuals or legal persons incorporated in Argentina that present research and development projects based on the application of modern biotechnology and/or nanotechnology. Potential beneficiaries also include individuals or legal persons incorporated in Argentina that present projects for the application or execution of modern biotechnology and/or nanotechnology, aimed at the production of goods and/or services or the improvement of processes and /or products. In either case, beneficiaries must carry out the relevant activities in Argentina and must be compliant with their tax and social security obligations. It is also provided that applicants are allowed to submit more than one project and receive the corresponding benefits, although individuals are limited to one project per year while legal persons are limited to three projects per year. However, if there is a surplus in the established quota, these limits may be increased.

Lastly, it is provided that owners of research and/or development projects approved within the framework of the regime will enjoy the following benefits:

  • Accelerated amortization/depreciation for new capital goods, special equipment, and parts or components acquired for an approved project, allowing for amortization/depreciation in full in the year a qualifying asset is put into service;
  • Advance refund of VAT corresponding to the acquisition of the assets referred to above, which will be credited against other taxes payable, or failing that, will be refunded; and
  • A tax credit bond equal to 50% of the expenses incurred in contracting technical assistance, research, and/or development services with relevant entities of the National System of Science, Technology, and Innovation, which will last 10 years from the date of issuance and is transferable only once.

The same benefits are provided for owners of projects aimed at the production of goods and supply of services, except the tax credit bond.

Law 27.685 entered into force on 17 September 2022.