Bill: “Bases and Starting Points for the Freedom of Argentinians”: Incentive Regime for Large Investments (“RIGI”).

Legal News - December 29, 2023

On December 27, 2023, the National Executive Branch (“PEN”) submitted to the National Congress the bill entitled “Bases and Starting Points for the Freedom of Argentinians.” The full text of the project can be found at the following link.

The bill proposes the creation of an Incentive Regime for Large Investments (“RIGI”) for Single Project Vehicles (VPUs) that hold “Large Investment Projects” in certain sectors and meet the requirements of the regime. The regime is intended to apply throughout the Argentine territory and aims to provide incentives, certainty, legal security, and efficient protection of rights acquired under the regime to-be-established.

The key points of the project include:

Scope: Vehicles holding a single project (“VPU”), which can be (i) corporations (including individual corporations and limited liability companies); (ii) branches established by foreign companies; (iii) dedicated branches; and (iv) joint ventures and other associative contracts.

Declaration of National Interest: Large investments that qualify and are executed under RIGI will be considered of national interest.

Included Sectors: (i) agribusiness; (ii) infrastructure; (iii) forestry; (iv) mining; (v) oil and gas; (vi) energy; and (vii) technology. The PEN may include new sectors additionally.

Adherence Period: 2 years from the effective date of the regime, extendable for an additional 2 years by the PEN.

Qualifying Conditions for Large Investments in Included Sectors: Without prejudice to other specified requirements, to qualify as a Large Investment, projects must: (i) involve an investment amount in computable assets equal to or exceeding a minimum investment amount to be defined by sector through regulatory means; (ii) fulfill a certain percentage of the aforementioned minimum investment amount (to be defined through regulatory means) for each of the first two investment years; (iii) constitute long-term recovery investments, evidenced by a condition that, during the first 5 years from the initial capital disbursement, has a quotient no greater than 30% between the present value of the expected net cash flow (excluding investments) and the net present value of the capital investments planned during the same period.

Incentives: Various tax, customs, and exchange incentives are provided, with regulatory stability for the following 30 years after joining the regime. Incentives aim to reduce the total tax burden and progressively ease exchange restrictions.

Establishment of an Infringement and Recourse Regime applicable to VPU: Sanctions imposed by the enforcing authority can be appealed administratively under Law No. 19,549 on Administrative Procedures, without prejudice to the VPU’s option to submit the dispute to arbitration.

Arbitration: For disputes arising from or related to RIGI between the Federal Government and a VPU adhering to RIGI, the following is envisaged: (i) consultations and amicable negotiations for a period of 60 days; and (ii) if the dispute cannot be amicably resolved within that period, it will be submitted to arbitration in accordance with (at the VPU’s choice):

- The PCA Arbitration Rules 2012;
- The Rules of Arbitration of the International Chamber of Commerce (excluding the Rules on Expedited Procedure);
- The Convention on the Settlement of Investment Disputes between States and Nationals of Other States dated March 18, 1965, or, if applicable, the ICSID Arbitration Rules (Additional Facility).

Except in the case of choosing ICSID arbitration, the arbitral tribunal or administering institution will determine the seat of arbitration, which must be located outside Argentina and in a country that is a party to the 1958 New York Convention.

The PEN is authorized to establish dispute resolution mechanisms with the VPU, specific to each project, in the administrative act approving the application for adherence and the investment plan.

Protected Investments: Rights and incentives acquired under RIGI are considered protected investments as provided in reciprocal promotion and protection of investment treaties. Their impairment may give rise to the international responsibility of the Federal Government.