Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

June 15, 2023
2023-1069

Argentine Government issues regulations for the promotional regime of investments in the automotive and auto parts industry

  • A new Decree establishes regulations applicable to a promotional regime for investments in the automotive and auto parts industry in Argentina.
  • The regulations include the list of tariff codes for goods that will be exempt from duties on exports.

On 29 May 2023, the Argentine Government published, in the Official Gazette, Decree 281/2023 (the Decree), which provides regulations for a promotional regime to encourage investments in the automotive and auto parts industry and its value chain.

Background

On 19 September 2022, Argentina enacted Law 27,686, which establishes a promotional regime to encourage investment in the automotive and auto parts industry. The promotional regime provides tax incentives for new investments from companies located in Argentina that produce goods directly related to the automotive industry (automobiles, trucks, engines, auto parts systems, among others).

The tax incentives provided in the promotional regime include: (i) an exemption from duties on the export of certain goods until 31 December 2031; (ii) the possibility to request a value added tax refund stemming from investments performed under the regime that have not been credited after three consecutive tax periods; and (iii) the option for accelerated tax depreciation of movable property in three consecutive annual installments.

The start-up period for investment projects approved by the Secretariat of Industry, Knowledge Economy and External Trade Management of the Ministry of Productive Development (Authority of Application) must end no later than 31 December 2029.

Decree 281

Eligible investment projects

The Decree states that to be eligible for the promotional regime, new projects must comply with the minimum investment amount to be established by the Authority of Application for each specific asset and/or activity.

To comply, amounts to be included in the minimum investment limit include investments in machinery and equipment, molds, dies or other instruments, fixed installations for processes, tests and trials and/or infrastructure work necessary to manufacture the product or improve the manufacturing process net of taxes, financial expenses, discounts and/or rebates.

The Decree also establishes the specific percentages to be considered for each type of asset/activity to be understood as a new project or significant redesign of the existing projects, eligible for the promotional regime.

Technical report

Compliance with the requirements of the promotional regime must be demonstrated by obtaining a technical report from:

  • Competent departments of National Public Universities
  • The National Institute of Industrial Technology
  • Other organizations to be determined by the Authority of Application

Exemption from export duties

The Decree includes the list of tariff codes for goods that will be subject to 0% in duties on exports until 31 December 2031.

Audit

The beneficiaries of the promotional regime will be subject to audits by the Authority of Application to verify compliance with the obligations under the regime.

The cost for verification activities and control of the regime shall be borne by the respective beneficiaries through the payment of a fee, which may not exceed 1% of the amount of benefits received.

Implications

Multinational groups in the automotive and auto parts industry interested in doing business in Argentina should evaluate this promotional regime and the potential benefits on their operations.

____________________________

For additional information with respect to this Alert, please contact the following:

Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more