Súper RIGI: 15% Profit Tax, More Benefits, and Limits on Local Taxes
The Minister of Economy, Luis Caputo, reported that the new "Súper RIGI", announced by President Javier Milei, will have greater tax benefits than the current regime, with the aim of attracting investments in industries that currently do not operate in the country.
The main difference with the Large Investment Incentive Regime (RIGI) will be the reduction of the corporate income tax rate from 25% to 15%. In addition, the accelerated depreciation scheme will be more favorable for projects covered by the new regime.
According to Caputo during a press conference, in addition to reducing the useful tax life to 60%, investments may be depreciated 60% in the first year, 20% in the second, and the remaining 20% in the third. Thus, companies will be able to recover the investment for tax purposes in a considerably shorter period, aiming to improve cash flow in the initial stages of projects.
The minister also noted that the exemption from import duties will be extended to all goods necessary for production. Currently, in the current RIGI, this benefit only applies to capital goods and there are "gray areas" due to differences in nomenclatures.
Regarding exports, he indicated that projects included in Súper RIGI will pay zero tariffs from the start of their operations. In the current regime, the exemption begins after three years, or two years for strategic long-term exports.
Caputo added that the bill will include limits on provincial and municipal tax burdens. Adhering provinces will not be able to charge more than 0.5% Gross Income Tax, while municipalities will not be able to apply taxes on sales.
Although the minimum investment amount required to access the new regime has not yet been defined, the minister assured that this point will be clarified before the bill is sent to Congress.
"We will have greater tax collection because, although there are tax reductions, we will be collecting more because these are industries that do not exist today," Caputo said.
Among the sectors that could benefit, he mentioned copper refining and laminating, and the manufacturing of lithium batteries, electric cars, solar panels, wind turbines, and potassium and phosphorus fertilizers.
"We will be encouraging the industrialization of our natural resources. Also the installation of data centers and businesses related to agriculture, fishing, and agroforestry," he affirmed.
According to the minister, these investments will generate employment, boost economic growth, and allow for increased revenue in the medium and long term, which would contribute to continuing the reduction of taxes.
For his part, Sebastián M. Domínguez analyzed the impact of Súper RIGI on fiscal dynamics, taxes, and investment. "There is a tax reduction, but this does not imply a loss of revenue, because these activities are not currently carried out in Argentina. That is, what is collected will be an increase in revenue," he said.
According to Domínguez, the country has natural resources that are not yet industrialized and, in addition, has changed its energy matrix from importer to exporter. However, he warned that historically there has been a lack of "a predictable and internationally competitive tax scheme" that would make those investments profitable.
"The reduction of the Profit tax rate to 15% and accelerated depreciation are known and reasonable tools for the intended objective. And the decision to set a ceiling on local tax pressure is, in my opinion, a very relevant measure: it attacks a structural problem that discourages long-term investments in Argentina," he concluded.
