On October 30, 2019 the Official Gazette published General Resolution No. 4618/2019 ("the Resolution") that sets forth the requirements for the use of the tax certificates provided in Law No. 27,191 to be granted when the electromechanical installations are considered as manufactured in Argentina (even when they have imported components).
To such effects, we will reproduce below the tax benefits of Law No 27,191:
- Accelerated amortization in income tax for those assets or infrastructure works included in the investment project.
- Refund of Value Added Tax ("VAT") for those assets or infrastructure works included in the investment project.
- The aforementioned benefits regarding income tax and VAT could be used simultaneously.
- It extends from 5 to 10 years the period for the deduction of tax losses for income tax purposes.
- The assets used for the project will not be part of the tax base for minimum presumed income tax purposes from the first day of the star-up of the construction works until the eighth year -inclusive- from the date of the start-up of such project.
- Dividends or profits distributed by the holders of investment projects will not be subject to income tax on a 10% rate when such profits are reinvested in new infrastructure projects in Argentina.
- Losses, interest and exchange differences arising from the financing of the project may be deducted for income tax purposes.
- The beneficiaries of this regime that can prove that 60% -or a lower percentage in special situations- of the electromechanical installations -excluding civil works- are manufactured in Argentina will be entitled to receive, as an additional benefit, a tax certificate to be used for the payment of national taxes, of a value equivalent to 20% of the national component of the electromechanical equipment -excluding civil works-.
- The importation of capital goods or any other special equipment which is necessary for the project will be exempt of import tax and any other related tax (excluding service fees).
With regard to the tax certificates, the Resolution sets forth:
- They will have a period of validity of 5 years, counted as from January 1 of the year following the grant date.
- The beneficiary may apply for the replacement of the tax certificate in up to 5 new electronic certificates. In this case, each new tax certificate will be equal to 1/5 of the original tax certificate.
- The amount of the tax certificate may be applied to cancel the tax liabilities arising from Income Tax, Minimum Presumed Income, VAT and Excise Tax.
- The assignment of a tax certificate may be performed whenever the assignor fulfils the following requirements:
(i) It does not have debts payable to the Federal Administration of Public Revenues ("FTA");
(ii) It has not used the tax certificate to be assigned;
(iii) Has reported the selling price of the certificate to the FTA; and
(iv) Has constituted the corresponding guarantee, if applicable.
- The assignee of the tax certificate may use the credit to cancel the tax liabilities arising from Income Tax, Minimum Presumed Income, VAT and Excise Tax.