January 7, 2025
Insights·Precios de transferencia·Tax

Incentive Regime for Large Investments RG No. 5590 – Transfer Pricing Considerations

The Large Investment Incentive Regime (RIGI) has emerged as a key tool to promote large investment projects, offering legal certainty and tax benefits to Single Project Vehicles (VPU).

As part of this effort, General Resolution No. 5590/2024 of the Federal Administration of Public Revenues (AFIP) establishes a special transfer pricing regime. This regulation introduces important differences with respect to the general regime, adopting the treatment of transactions between related local entities and establishing specific mechanisms such as the use of safe harbors and the possibility of using the counterparty as a tested party.

For the purposes of the RIGI, transactions carried out by VPUs with related parties are considered to be transactions with related parties:

Its members -subjects that conform the Temporary Joint Ventures or other associative contracts-, constituted or located in the country or that are tax residents.
Its owners, incorporated or based in the country or who are residents.
Local related entities.

Transactions carried out between members, owners and related entities of the VPU that do not have the participation of the latter are excluded from the treatment as transactions with related parties.

It should be noted that all transactions carried out by the VPU with related entities abroad or located in Low or No Tax Jurisdictions and/or Non-Cooperating Jurisdictions will be under the scope of the general transfer pricing regime and RG No. 4717.

The regulation requires the filing of an “Annual Operations Report” detailing the transactions carried out by the VPU with the aforementioned local related parties. This report must be filed within six months after the closing of the fiscal year, through the “Digital Filings” service, selecting the procedure “Law 27,742 – RIGI Annual Operations Report”.

The Annual Report shall include, among other relevant information, the following:

Formation of the group and its activities.
Description of the strategies related to intangible assets of the group and the VPU.
List and description of service agreements and/or transfer of intangible assets.
Analysis of the functions, assets and risks of the VPU and the counterparties involved.
Economic analysis of operations.

In order to ensure that the Contribution or Cost Sharing Agreements (CSA) signed between the VPU and its related parties, both local and foreign, comply with the arm’s length principle, the regulations establish specific considerations for the treatment of these transactions.

RG No. 4717, as amended and supplemented, will be applied on a supplementary basis in those aspects not expressly regulated in RG No. 5590/2024.

For further information please contact: https://ftp.afip.gob.ar/rigi/procedimiento/operaciones.asp

The following is a comparative scheme between the Special Regime (RG No. 5590) and the General Transfer Pricing Regime (RG No. 4717), indicating the difference between the content and scope of each one.