Since the approval of the Bases Law, Argentina has redefined its strategies to attract international investors.
Learn how the Bases Law impacts businesses in Argentina
Incentive Regime for Large Investments
To attract international investment, the government established the Incentive Regime for Large Investments (RIGI), offering tax, fiscal, and exchange benefits for national or foreign projects that exceed $200 million in any economic sector.
It is a set of practical benefits aimed at ensuring stability and legal security for those investing money in Argentina. This includes the freedom to liquidate money, extension of import and export rights, full access to the exchange market, rapid amortization of assets, and reduction of taxes and customs duties, among other benefits.
Additionally, there will be no restrictions on company reorganizations, and payments abroad for services or rentals will not be taxed in Argentina. RIGI aims to enable activities such as exploration, processing, transportation, storage, industrialization, and commercialization of hydrocarbons to be carried out by state, private, or mixed companies.
Are investments from all sectors welcome?
While the goal is to attract investments from all sectors, the Argentine government is primarily focused on mining companies, hydrocarbon companies, and large investment funds. This focus will permit unrestricted extraction of natural resources and resolution of issues through international arbitration.
A new era is beginning in Argentina for hydrocarbon exploration. Javier Milei’s government aims to maximize profits by prioritizing surplus production for export rather than fully supplying the domestic market.
RIGI is part of the Bases Law
The primary goal of RIGI, as included in the Bases Law, is to transform the energy sector into a major industry like soybeans by developing liquefied natural gas (LNG). Concessionaires will have full control over the extracted hydrocarbons and the freedom to sell them, including for export. This represents a historic regulatory change for the country’s trade and geopolitics.
It is worth noting that all projects complying with RIGI can also be developed in other sectors, such as forestry, tourism, infrastructure, technology, and steel. Within less than two months, after negotiations between Argentine officials and representatives of key economic sectors, all details are expected to be finalized. RIGI already guarantees stability in tax, customs, and exchange rules for 30 years for any qualifying investment project
What is the Bases Law?
According to the Argentine president, this law aims to simplify and modernize the functioning of the State. With a series of structural reforms, it seeks to promote administrative efficiency and reduce bureaucracy. Additionally, Javier Milei said he will reduce the fiscal deficit by cutting social plans, public works, food assistance, and investments in health and education.
The new Bases Law
After more than 14-hour sessions in both chambers, the new version of the law was approved but is still being regulated and has not yet come into effect. The law is comprehensive, covering topics such as the declaration of economic emergency, state reform, changes in registered employment, labor modernization, energy, and the Incentive Regime for Large Investments (RIGI), among others.
For and Against the Bases Law
Supporters
The Bases Law indeed generates political controversy, particularly RIGI, which is a hot topic both on the public agenda and in the affected areas. This fundamental initiative for the country elicits both favorable opinions and criticisms at various levels of debate.
Most companies, especially those in renewable energy, are excited about the opportunity to access natural resources and conduct financial operations with few restrictions, without the need to liquidate foreign exchange or adhere to strict rules as required in many developed countries.
The national industry, including the forestry sector, along with a group of international investment funds, is optimistic about the tax and exchange rate stability and legal security that Argentina is offering.
Opponents
Criticism comes from a local political group that prioritizes national sovereignty in commercial, territorial, and economic matters. Leaders, officials, academics, and some entrepreneurs argue that investments should not only generate profits for investors but also foster the development of industry in Argentina and support the growth of regional economies.
The fishing sector has also raised concerns, claiming that RIGI allows foreign capital to harm local production and jeopardize the preservation of marine resources, which could negatively impact the national industry.
Similarly, over 500,000 Argentine SMEs, which provide more than 4.5 million jobs, are worried about various conditions that threaten their survival in a free market economy under international regulations. Although the law has been passed, it is not yet in effect, so it remains to be seen what the Bases Law will bring to Argentina.
