Renewable Energy: investment opportunities
Following our previous flash of October 2015, please note that the Executive Branch issued the applicable regulations (Decree 531) of Law 26,190 by which Argentina seeks the use and development of renewable sources on electricity consumption. Argentina is likely to hold a renewable energy auction next month as part of its plan to reach a renewable power share of 8% by end-2017 and 20% by 2025. The country has identified regions with significant wind and solar potential that have already attracted investor interest. Approved investments projects shall be granted several tax incentives; immediate recovery of VAT balance refund, accelerated depreciation on income tax, tax credit certificates, exemption on the minimum presumptive income tax, and exemption on dividend distributions reinvested, among others. Recall that until December 31st, 2017 importers of machinery, equipments or supplies for the development of energy generation projects will be exempt of customs duties. Regulations by the Tax Authority will be released promptly.
Economic promotion of the province of La Pampa
The province of La Pampa enacted a broad regime to promote productive investment in its territory. In this regard, companies that locate their business in the province will be granted tax exemptions on local taxes for up to 15 years (turnover tax, stamp tax, real property tax, and vehicles tax). Moreover, the regime provides for the reduction on public service rates, financial facilities, and support for infrastructure works and acquisition of equipment.
Oil & Gas – Deduction of expenses for the blockage of oil wells
The Tax Court issued a questionable ruling under the case “Petrobras Argentina S.A.” by which the deduction of the expenses by the company, regarding the clogging of oil wells, was reversed. The court considered that the deduction of such expenses is only allowed if the exploitation of the oil wells is finished and the process for their abandonment is concluded. We consider that, for purposes of the deduction of expenses related to the blockage of oil wells, companies shall work out and revise their accounting records.