The labor reform project envisages the creation of the Incentive Regime for Medium Investments (RIMI), an initiative to promote domestic and foreign productive investments throughout the territory of the Argentine Republic. RIMI’s core objectives are to promote economic development, strengthen the competitiveness of the sector, increase exports and promote job creation.
The regulation is aimed at legal entities based in the country that make productive investments in the first two years of its validity.either. In order to benefit from the advantages, minimum investment amounts are set, which are staggered according to the size of the company They range from $150,000 for small businesses to $30,000,000 for larger businesses.
The main tax incentives are two:
1. Accelerated payback in income tax: Allows beneficiaries to depreciate their productive investments in a significantly shorter time than usual, improving tax cash flow.
2. Refund of VAT credits: It facilitates the reimbursement of VAT balances obtained through investments, subject to an annual budget quota and a period of three tax periods.
The regulatory framework defines strict exclusion criteria for companies with criminal convictions, tax debts or insolvency. It also constitutes forfeiture if the funded assets do not remain in the beneficiary’s assets for at least two years. The CUSTOMS COLLECTION AND CONTROL AGENCY (ARCA) and the MINISTRY OF ECONOMY are the authorities responsible for regulating, implementing and monitoring the system.
RIMI goals
Origin and scope
Article 158 officially establishes the creation of the Medium Investment Incentive Regime (RIMI), applicable throughout the territory of the Argentine Republic.
Strategic goals
According to Article 159, the fundamental objectives of RIMI are as follows:
- Promote medium-sized investments at home and abroad to ensure the country’s prosperity.
- Promoting economic development and value chain consolidation.
- Develop and strengthen the competitiveness of the various sectors of the economy.
- Increase exports of goods and services.
- Promote job creation.
Eligibility criteria and requirements
Topics reached
According to Article 160, legal entities registered in the Argentine Republic or authorized to act in its territory may be beneficiaries of RIMI. The regulation applies to productive investments made in the first two years after the entry into force of the RIMI.
Productive investment concept
Article 161 defines “productive investments” as those intended to:
- The acquisition, preparation, manufacture and/or importation of new personal property that is depreciable for income tax purposes. Cars are expressly excluded.
- The execution of work directly affected by the development of productive activities.
Exclusions: Investments in financial assets, portfolio assets and exchange assets are expressly excluded.
Special cases: Certain investments are eligible regardless of their amount:
- Irrigation systems and/or devices.
- Goods with high energy efficiency.
- Hail protection nets for the agricultural sector.
- Movable goods.
Minimum investment amounts
Article 162 stipulates that to access the benefits of RIMI, the level of productive investments must be at least equal to the following amounts, broken down by the size of the company (according to Law No. 24,467):
RIMI
Business category
Important tax advantages
Accelerated payback in income tax
Article 163 offers beneficiaries the possibility of applying an accelerated amortization regime to their productive investments from the tax period in which the asset is concerned. The modalities are as follows:
Depreciable Personal Property: In two (2) annual, equal, consecutive installments.
Work: In annual installments resulting from reducing the estimated useful life to sixty percent (60%).
Agricultural irrigation equipment and/or high energy efficiency equipment: In one (1) installment.
Depreciable Assets: In two (2) annual, equal and consecutive installments.
Hail protection nets: In one (1) installment.
Once exercised, this option must be communicated to ARCA and applies to all productive investments made under the scheme without exception.
Reimbursement of VAT credits
Article 164 stipulates that VAT credits obtained through productive investments can be counted towards the refund. This refund may be requested after three (3) fiscal years have elapsed since the option was exercised. This service is operated with a maximum annual budget quota set by the MINISTRY OF ECONOMY.
Exclusions and reasons for expiration
Exclusion criteria of the regime
Article 165 lists the cases that prevent a company from benefiting from RIMI:
- Criminal convictions: Legal entities (or their partners and directors) with a confirmed conviction in the second instance for offenses under Law 27.401 (corporate criminal liability), criminal tax law, customs law or foreign exchange criminal law.
- Bankruptcy: Companies are declared bankrupt.
- Tax debts: Persons who declare fixed, enforceable and unpaid debts in tax, customs or pension form.
- Duplication of benefits: Legal entities that take advantage of the Large Investment Incentive Regime (RIGI) or another incentive system for the same productive investments.
The occurrence of any of these assumptions after joining RIMI will result in the tax benefits being completely extinguished.
Expiration of services
According to Article 167, the benefits expire if the assets from which they arose no longer form part of the beneficiary’s assets within two (2) financial years of their taking effect. There are the following exceptions:
a) Replacement of the asset with another of equal or greater value. b) Destruction of property due to a fortuitous event or force majeure. c) One third of the useful life of the asset has expired.
Regulatory framework and sanctions
law enforcement agencies
Articles 161 and 170 designate the MINISTRY OF ECONOMY and the CUSTOMS COLLECTION AND CONTROL AGENCY (ARCA) as competent authorities to adopt the supplementary, explanatory and operational rules necessary for the application of RIMI. In particular, ARCA must specify operating regulations and obtain technical reports from responsible bodies to identify eligible goods and construction services.
Sanctioning process
Article 168 stipulates that in the event of withdrawal of benefits by a provisional administrative act guaranteeing the right of defense, the beneficiary must do the following:
Back to the treasury:
- VAT credits returned.
- Income tax paid in arrears.
- The corresponding compensation interest.
Pay a fine: ARCA imposes a fine not exceeding twice the value of the usufruct right.
validity
According to Article 169, the provisions of RIMI come into force on the day following its publication in the Official Journal.
Additional operational considerations
Investment timing
Article 166 clarifies that, for the purposes of RIMI, a productive investment is deemed to have been made in the financial year in which its implementation and its impact on the generation of taxable profits are verified in accordance with the Income Tax Law.
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