In order to reinforce the promotion of renewable energy the new administration has amended the Renewable Energy Promotion regime (Laws No. 26.190 and Law No. 27.191 as regulated by Decree 531/2016), introducing important improvements and benefits.

The new framework and the decision by the Government of promoting the development of clean sources of energy to increase renewable sources within the Argentine energy matrix (which must represent 8% by December 31, 2017, 12% by December 31, 2019, 16% by December 31, 2021, 18% by December 31, 2023, and 20% by December 31, 2025) open the possibility for important and profitable investments and business in this sector. Among the benefits of the new regime:

  • Beneficiaries will be able to choose between an anticipated VAT refund or an accelerated depreciation of the infrastructure goods, for Income Tax purposes.
  • 10 years extension of the term for the set-off of substantial financial losses against Income Tax.
  • The goods related to the project are not considered for the calculation of the Minimum Presumed Income Tax.
  • Interests and exchange differences from the financing of the project can be deducted from the losses of the Company.
  • The distribution of dividends are not subject to the 10% Income Tax provided by law as long as that those earnings are reinvested in new infrastructure projects within Argentine territory.
  • Beneficiaries with projects integrated by national components in excess of 30% will be entitled to obtain a tax credit equivalent to 20% of the value of those national components.
  • An exemption to import duties, taxes or fees for the import of capital goods, special equipment, spare parts or components, and certain supplies as determined by the authorities, until December 31, 2017.

A very interesting public bid comprising 1 Gwh of renewables is being launched by the government. Even though projects within that bid have capacity limitations (100mwh per project), players wishing to develop larger projects may approach the federal government or provincial governments with larger projects beyond the public bid. These other projects will have better chances of being accepted if a stake is offered to the government under PPPs or similar arrangements.

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