In brief
On 12 February, the Senate gave half sanction to the Labor Modernization Project (“Project”), which proposes tax modifications aimed at (i) incentives productive investments made by Micro, Small and Medium-sized Enterprises; (ii) reduce the tax burden on certain financial investments; (iii) establish new rules in relation to the updating of tax losses; (iv) reduce the VAT rate on the provision of electricity used in irrigation systems and/or equipment for the agro-industrial sector; (v) exempt from income tax the rental and sale of real estate under certain conditions; (vi) establish the criteria for tax residence of foreign individuals who have obtained Argentine citizenship by naturalization by virtue of having made relevant investments in the country, under the terms of paragraph 2 of Article 2 of Citizenship Law No.346; and (vii) to annul the Excise Tax for certain items.
In focus
Incentive Scheme for Medium Investments (“RIMI”)
- The project creates the RIMI, a promotional regime aimed at encouraging “productive investments” made by Micro, Small and Medium-sized Enterprises (up to and including the category of Medium-sized Enterprises Tranche 2), throughout the Argentine territory. To access the benefits, investments must exceed certain minimum amounts, which vary according to the size of the company (for example, USD 150,000 for Micro Enterprises, USD 600,000 for Small Enterprises, USD 3,500,000 for Medium Enterprises Tranche 1 and USD 9,000,000 for Medium Enterprises Tranche 2) and must be made during the first two years from the date of entry into force of the regime.
- To qualify as Micro, Small and Medium Enterprises, companies are classified based on the number of employees, sales and assets by establishing four categories. To qualify in each category, the employee, sales, and asset limits established for each category cannot be exceeded.
- “Productive investments” are considered to be the acquisition, processing, manufacture and/or import of new movable goods -except automobiles-, amortizable in income tax, as well as the execution of works, to be directly affected by the development of productive activities in Argentina.
- Companies that qualify may opt for an accelerated depreciation regime in the Income Tax, varying the depreciation installments according to the type of asset in question. In addition, the early refund of VAT tax credits generated by investments is foreseen, after three monthly fiscal periods from the calculation.
Tax modifications
- A reduced VAT rate of 10.5% is established for the provision of electricity used in irrigation systems and/or equipment for the agro-industrial sector.
- Article 25 of the Income Tax Law is amended to allow the tax losses generated in fiscal years beginning on or after 1 January 2025 to be updated by the variation in the Consumer Price Index (CPI).
- Subsection h) of Article 26 is amended to exempt from income tax the interest originated by fixed-term deposits. (The previous text only exempted fixed terms in national currency).
- Subsection n) of Article 26 is amended to exempt from tax the gains derived from the rental of real estate for house-dwelling purposes and the result of the alienation and transfer of rights by individuals and undivided estates over real estate located in Argentina, as of 1 January 2026.
- The criteria for tax residence of foreign individuals who have obtained Argentine citizenship by naturalization by virtue of having made relevant investments in the country are established, under the terms of paragraph 2 of Article 2 of Citizenship Law No. 346.
- The bill provides for the repeal of Excise Tax for the following items: (i) Insurance, (ii) Cellular and satellite telephone services, (iii) Luxury objects, (iv) Motor vehicles and engines, (v) Recreational or sports boats and (vi) Aircraft.
*This document summarizes a legislative project in process. The provisions will enter into force only after their approval and regulation.
Barbara Roca and Bernardo Trueba, Associates, have contributed to this legal update.
Download the Spanish version of Argentina: Tax Amendments in the Labor Reform Bill Approved by the Senate.