The regulation of the Incentive Regime for Medium Investments (RIMI) adds relevant definitions for companies that are evaluating productive investments in Argentina.
Although some complementary regulations are still pending for its operational implementation, the new framework already makes it possible to identify more clearly the tax benefits of the RIMI, the access requirements and the types of investments that could be covered.
What is RIMI?
RIMI is a regime aimed at promoting productive investments through tax incentives for certain companies. Among its main benefits, it contemplates the possibility of applying accelerated depreciation in income tax and recovering the VAT credit balance related to the investments included.
In this context, the recent RIMI regulation provides more precision on how the regime could be implemented in practice and what aspects should be reviewed today by companies with investment projects under analysis.
RIMI regulation: what it changes in practice
The regulation introduces specific definitions on deadlines, requirements and conditions for the application of the regime.
1. The deadline for making investments has not yet begun to run.
Although the regime has already been regulated, the two-year term to make the investments will begin to be computed only when the complementary Joint Resolution of the competent agencies is published.
This point is relevant because it has a direct impact on project planning and on the evaluation of when the benefit could be used.
2. The start-up can be after the investment period.
Another important aspect is that the regulation admits that the start-up of the investment can be verified after the expiration of the investment term.
In practical terms, this broadens the framework of analysis for projects whose execution and entry into operation are not immediate.
3. The SME Certificate becomes a relevant requirement.
The regulation also clarifies that companies must have an SME Certificate at the beginning of the fiscal year in which they make the first investment covered by the regime.
Therefore, in addition to the technical analysis of the project, it will be important to review compliance with this formal requirement in advance.
Which investments can be covered by the RIMI
One of the most useful contributions of the regulation is that it better delimits the universe of covered investments.
Investments that could be covered by the incentive regime for medium-size investments include:
- New depreciable personal property, provided that it falls within certain specific categories.
- Irrigation equipment, aimed at improving water resource management and productivity.
- Anti-hail nets, under certain technical characteristics.
- Semi-vehicles, in the cases provided for by law.
- Works, including certain goods and expenses related to their installation.
- Energy-efficient goods, associated with generation, storage, transportation or optimization of energy consumption.
This point is especially relevant for companies evaluating investments in productive assets, infrastructure or energy efficiency.
When do RIMI tax benefits apply?
The regulation also clarifies a central aspect: the tax benefit will be applied in the fiscal year in which the start-up of the productive investment is verified, provided that the required conditions are met.
This means that it is not only important whether the investment fits in, but also when it actually comes into operation, since that moment will have an impact on the utilization of the benefits.
Why RIMI should be analyzed today
The RIMI regulation in Argentina opens a concrete instance to review projects in progress or under evaluation from a fiscal and operational perspective.
In particular, it may be relevant to analyze:
- whether the projected investment could be covered by the regime;
- what requirements should be met;
- what would be the time of start-up;
- and how to take advantage of the tax benefits provided.
In other words, RIMI is no longer just a regulatory announcement and is starting to become a topic of practical analysis for companies with investment decisions on the agenda.
RIMI: an opportunity to review productive investment projects
The regulation provides greater clarity on the scope of the regime and provides concrete elements to evaluate its possible application in each case.
For companies with productive investment projects, this may be an opportune moment to review the structure, timing, requirements and potential tax impact of the new scheme.
Andersen can assist you in the review of the framework, the requirements and the opportunity to apply the RIMI according to the characteristics of each investment. If you would like to evaluate its scope in terms of a specific project, we can arrange a meeting.
Felix Jose Rolando
Tax Partner
felix.rolando@ar.Andersen.com