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Argentina Reestablishes and Revises Domestic Capital Goods Manufacturing Incentive — Orbitax Tax News & Alerts

Argentina has published Decree 209/2022 of 26 April 2022, which reestablishes and revises the incentive regime first introduced by Decree 379/2001 for the domestic manufacture of certain goods, including capital goods and IT and telecommunications equipment (promoted goods). The prior version of the regime expired on 31 December 2021.

Decree 209/2022 establishes revised conditions for the incentives, which include:

  • A beneficiary company must be registered in the Registry of Beneficiaries and Products of the Incentive Regime for Manufacturers of Capital Goods;
  • At least 70% of the company's total revenue in the 12 months prior to the registration request, or of the annual average of the last 36 months prior to the request, must be derived from the sale of promoted goods, manufactured on its own account in Argentina, as well as the provision of services directly linked to the design, engineering, installation, and assembly of promoted goods;
  • At the time of registration:
    • the company is registered as a micro, small or medium enterprises (MiPyME); or
    • the company's annual expenditure on salaries and employer social contributions for employees involved in the production of promoted goods is equal to at least 15% of the total revenue from the sale of promoted goods in the 12 months prior to registration;
  • The company has an industrial establishment (plant) in Argentina;
  • The company has at least 5 employees dedicated to the production of promoted goods;
  • The company is in compliance with all tax and social security obligations; and
  • The company has no pending union debts (obligations).

In order to maintain their registration in the Registry, companies must prove that they continue to meet the conditions every 2 years.

Decree 209/2022 also establishes revised incentives (benefits), which include:

  • A reduction in employer social security contributions according to the laws for the Argentine Integrated Social Security System (SIPA), the National Institute of Social Services for Retirees and Pensioners, the National Employment Fund, and the Family Allowances Regime:
    • for MiPyME companies, the reduction is 90% of all employer contributions for all employees; and
    • for other companies, the reduction is 70% of the employer contributions corresponding to employees involved in the production of promoted products, as well as the provision of services directly linked to their design, engineering, installation, and assembly;
  • A tax credit bond (certificate) that may be requested annually, equal to:
    • 40% of the value resulting from multiplying the total amount of income tax determined in the prior tax year by the percentage of revenue from the sale of promoted goods;
    • 80% of the amounts of investments made in R&D in the prior year up to 2.5% of revenue from the sale of goods for MiPyME companies and 2.0% for other companies;
    • 60% of the export refunds authorized for promoted goods; and
    • 30% of the benefits corresponding to the social security contribution reduction and the tax credit bond based on income tax for MiPyME companies, and 15% for other companies, provided there are proven continuous improvements in the quality of services, goods, and/or processes.

The tax credit bonds can be used for the payment of Income Tax, Value Added Tax (VAT), and other Internal Taxes collected by the federal tax authority (AFIP). They are nominative and may be assigned (transferred) once to third parties. In any case, the value of the benefits granted annually may not exceed 10% of the total revenue for the same period.

The measures of Decree 209/2022 generally entered into force with retroactive effect from 1 January 2022 and apply until 31 December 2027. Certain transitional provisions also apply, including that tax credit bonds may be requested under the prior version of the regime up to 31 May 2022 for operations invoiced up to 31 December 2021.