The libertarian’s proposal consists of attracting investors, national or foreign, who want to develop productive ventures for US$200 million or more. In exchange, it offers them a system of tax and exchange benefits for a period of at least three decades.
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Javier Milei aims to bring investors capable of investing more than US$200 million in Argentina.
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ProMendoza It is made up of representatives of the provincial government, the Commercial and Industrial Union of Mendoza (UCIM), the Mendoza Stock Exchange and the Economic Federation of Mendoza (FEM),
The ProMendoza report
The national deputy for the UCR Julio CobosIn collaboration with ProMendozacreated a report on the Large Investment Incentive Regime (RIGI): At the local level, as drafted, it will have a very limited impact.
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Julio Cobos has been second vice president of the Chamber of Deputies since December 10, 2023.
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ProMendoza points out that, according to the investments made between 2016 and 2019 In Mendoza, there were only four ventures that invested more than US$200 million, that is, one per year.
The document highlights that, by reducing the minimum investment amount, more productive projects in Mendoza could access the Incentive Regime for Large Investments:
- US$200 million: 1
- US$50 million: 4
- US$10 million: 9
- US$ 5 million: 11
The size of the projects that can qualify (investments greater than USD 200 million) discriminates against certain regional economies of Argentinawhere the SMEs that support the productive framework and employment, explains the report presented by ProMendoza.
The document goes on to anticipate that the impacts They will focus on very specific activities (mainly hydrocarbons, mining, lithium, large agroindustrial projects and automotive industry) and in certain regions of the country.
A revealing fact that supports this concentration is that, between 2016 and 2019, on average 28 investment announcements per year over US$200 millions throughout the country. However the 55% of these advertisements focused on just three provincesand almost the 80% in six provinces, according to the report presented.
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That is why the ProMendoza Foundation is asking national legislators for a regime that “replicates the benefits of the RIGI but reduces the minimum amount of investments to be promoted.”
The Mendoza UCR in favor of the RIGI and Cobos seeks to adapt it to Mendoza
Julio Cobos, Lisandro Nieri and Pamela Verasay They were the Mendoza radicals who voted in favor to implement the Incentive Regime for Large Investments.
Cobos reiterated what ProMendoza stated: “In Mendoza it will be very limited, concentrating on activities linked to energy and mining“.
He advanced to ONE Diary which is working on a RIGI aiming to reduce investment amounts. “We are about to present this RIGI project but for the national industry and aiming to reduce investment amounts“he explained.
“We had requested that the minimum to enter the regime be between 10 and 50 million dollars, to also extend it to the fruit and vegetable industry and viticulture sector“said Cobos.
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Besides, Lisandro Nieri commented to ONE Diary which “helps Mendoza to be able to develop ventures in sectors such as hydrocarbons or minerals.”
However, he added that “a great slope is an investment regime for projects of regional economies, where despite being large projects, the amounts are much lower than those established in the RIGI”.
Although he assured that supports the regimebecause it is the way to attract large investments given the current situation in Argentina.
What is the RIGI that Milei seeks to implement to attract investors?
In this attempt to attract foreign investment, the bill approved in the Chamber of Deputies proposes a tax regime for large investors. Defined as “single project vehicles” (SPV), these investors must ensure a Minimum investment of US$200 million and the benefits will be for the operations of the presented project.
To do this, the text establishes restrictions. Once they enter this regime, they cannot develop activities or possess assets not affected by said project, with the exception of temporary investments of their working capital that facilitate the prudent administration of the company’s funds.
Within the regime Various business forms can enter: public limited companies, including sole proprietorships, limited liability companies, branches of foreign companies and temporary joint ventures.
However, not everyone is eligible. They remain excluded those with final convictions under Law No. 27,401, those declared bankrupt and those who maintain firm and enforceable tax, customs or pension debts.
The benefits For those adhered to the regime they are substantial. Initially, the income tax is reduced to a 25%, significantly lower than the 35% applied in the highest category.
Furthermore, during the first seven years, the rate on net profit is 7%, later reducing to 3.5%.
In turn, they will be able to compute the tax amounts on debits and credits as a credit balance in Profits, or transfer them as payment to a third party.
About imports and exportsIf approved by senators, the project establishes that cannot be “applied” “fees, quotas, or official prices”. And it offers a little more. Exempts VPU holders to pay “Import duties, statistics fee and destination checkand any regime for the collection, collection, advance or withholding of national and/or local taxes“.
After three years, the Export rights They will also be eliminated. It is important to note that the foreign exchange necessary to finance the project will have free availabilitywhether they come from inside or outside the country.
Another benefit is that the VPUs will not be obliged to enter and/or settle foreign currencies in the exchange market and/or any equivalent value corresponding to other items or concepts (such as capital contributions, loans or services) linked to the project that is the object of the approved investment plan, counting on their free availability, the project clarifies.
Even when? Until the end of the project at the end of its useful lifebankruptcy, voluntary withdrawal or a sanction.
Today, the chapter of this regime within the Bases law has great support and is on track. It has already been approved in the Chamber of Deputies with 136 affirmative votes, 111 negative votes and 5 abstentions. Included among those are the 9 Mendoza residents: 6 voted in favor (LLA and UCR) and 3 against (those from UxP).
The next challenge that Milei has to pass the Bases law is the Senate, where there are three representatives from Mendoza: Anabel Fernandez Sagasti (from UxP, a force that in deputies voted against this chapter, except three members) and Rodolfo Suarez and Mariana Juri from the UCR.
The mining sector has already come out to celebrate
The mining sector – which normally has projects of more than US$ 200 million -, represented by Raul Rodriguezpresident of CaMEM, explained that both foreign and Argentine investors are optimistically awaiting the sanction of this section of the basic law.
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Raul Rodriguezpresident of CaMEM.
“The interesting thing about this regime is that by lowering the tax pressure it will have repercussions with VAT, profits, customs issues, so we become more competitive within the country and with competitors from other countries“he explained.
“Today we are having a hard time competing with the rest of the continent,” he added about the project that the national government hopes to sanction before May 25, the day on which, they speculate, signing the May Pact with the governors.
“There is a lot of expectation among investors from other countries; because this, if the tax, tax, and customs costs are lowered, the investment becomes more profitable. In addition, there are the benefits that the labor reform will bring,” he analyzed, although without letting go that we have to wait for the final text.
