in a nutshell
- Resolution 625/2022 (“resolution“) Secretary of Energy (“secretary“), Act No. 19,640 (“law“) Tierra del Fuego (“administration”).
- This regime refers to special customs territories and includes: b) Customs incentives applicable to the receipt or delivery of goods that a company located in a special customs area may do with a company located in another operating area. Exemptions apply to income tax, value added tax (VAT) and excise tax.
A resolution was published in the Official Gazette on August 16, 2022, incorporating new hydrocarbon ventures into the administration’s legislation.
1. Legal tax incentives
For legal purposes, Argentina is divided into three operating areas:
- Free waters consisting of islands in Antarctica and the South Atlantic
- Special custom area including Tierra del Fuego Island
- continental territory
The preferential tax regimes mentioned below relate to special customs territory and shall include: b) Customs incentives applicable to the receipt or delivery of goods that a company located in a special customs area may do with a company located in another operating area. In fact, this type of transaction is considered an import/export operation. Exemptions apply to income tax, value added tax and consumption tax.
The analysis of customs benefits requires the first distinction between imports and exports and the second distinction when entering or exiting a special customs territory. continental territory. We also need to consider the origin and fate of the goods (raw materials and finished products).
For the purposes of this analysis, it is important to point out that exports are subject to export duties and imports are subject to import duties, value added taxes and statistical taxes.
2. 1. Classification as a “New Hydrocarbon Venture”
The resolution establishes that “new hydrocarbon ventures” are considered projects that commit to a minimum investment of:
- 200 million for offshore projects in the subsoil of the continental shelf under the jurisdiction of the State and areas adjacent to the territorial waters of Argentina, hydrocarbon areas under the jurisdiction of Tierra del Fuego, Antarctica and the South Atlantic Islands; US$50 million Up to 4 years
- US$10 million for up to four years on land areas under the jurisdiction of Tierra del Fuego, Antarctica and the South Atlantic Islands.
In addition to committing the aforementioned amounts, new hydrocarbon projects must consider building new production infrastructure, expanding capacity, compressing and processing existing plants, or adding and developing reserves through installations. It is important to note that there is A new one for the coordination necessary for transportation and commercialization of oil and gas production.
In addition, the development of infrastructure for the transport of liquid and/or gaseous hydrocarbons, as well as industrialization projects and/or liquefaction or regasification of such hydrocarbons should be included.
2.2. Sticking to the system
The Secretary evaluates projects submitted for the purpose of demanding compliance with the Administration and makes decisions to classify them as “New Hydrocarbon Ventures.” Benefits are effective from the date or terms set forth by the Secretary in the resolution classifying the business.
2.3. Impact on hydrocarbon production
Hydrocarbons produced as a result of the development of activities included in the framework of the “New Hydrocarbon Ventures” shall be considered wholly produced in the Special Customs Territory and shall enjoy the benefits laid down by the regime.
2.4. Consequences of non-compliance
If a person claiming the classification of a particular project as a “new hydrocarbon venture”, through their fault or cause, fails to comply with the requirements set out above, that project will lose such classification and, therefore, the administration.
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