Argentina: The Public Registry of the City of Buenos Aires has regulated the adhesion of Dedicated Branches to the Incentive Regime for Large Investments

12 Sept 2024    3 minute read

In brief

On 5 September 2024, General Resolution No. 19/2024 of the Public Registry of the City of Buenos Aires was published in the Official Gazette ("Resolution"). This Resolution establishes the regime for the "dedicated" or "special" branches created by Law No. 27742 on Bases and Starting Points for the Freedom of Argentinians ("Bases Law"), to facilitate their adhesion to the Incentive Regime for Large Investments (RIGI) introduced by Section 164 of the Bases Law. The goal of the RIGI is to encourage domestic and foreign investments, promote economic development and provide legal certainty for their development.

The Resolution will become effective on 6 September 2024.

Contents

In depth

The purpose of the Resolution is to regulate the conditions for dedicated or special branches in light of the recent Decree 749/2024, which regulates the RIGI. It also invites jurisdictions that have joined the RIGI to replicate the procedures and regulations established in the Resolution, thereby facilitating and making the implementation of the RIGI simpler and more effective throughout the country.

The Resolution will become effective on 6 September 2024.

Single-Project Vehicles — Creation of Dedicated or Special Branches

Single-project vehicles (SPVs) may apply to the RIGI to carry out at least one phase of a RIGI-eligible investment project, subject to certain requirements.

Pursuant to the Bases Law, the following will be considered SPVs:

  1. Corporations (including single-shareholder corporations)
  2. Limited liability companies
  3. Branches of entities incorporated abroad under the terms of Section 118 of the General Associations Law No. 19550
  4. Dedicated or special branches, temporary joint ventures and other associative contracts

In cases in which the entities mentioned in (i) to (iii) wish to apply to the RIGI but engage in one or more activities or hold one or more assets that will not be part of the investment project, they may establish, for the sole purpose of applying to the RIGI, a dedicated branch solely for carrying out a RIGI-eligible project ("Dedicated Branches" or "Special Branches").

Requirements for the incorporation of Dedicated Branches

  1. Registration with a Public Registry: Dedicated Branches must be registered with the Public Registry of the jurisdiction of incorporation.
  2. Tax ID: The branch must have its own tax identification code (CUIT) and be registered for relevant taxes separately from its parent company registered in Argentina.
  3. Allocated capital: The regulation does not establish a minimum capital amount, which can be expressed either in local currency or USD. The asset assigned to the project for which the Dedicated Branch was created must be identified and valued. Additionally, transferring ownership of these assets to the Dedicated Branch is not mandatory.
  4. Sole purpose: The sole purpose of Dedicated Branches must be to fulfill the project for which they joined the RIGI. Thus, the assets, liabilities and staff must be assigned to this project.
  5. Separate accounting: The Dedicated Branch shall maintain separate accounting records from its parent company registered in Argentina, in accordance with the regulations applicable in its jurisdiction.
  6. Resolution to create the Dedicated Branch: The creation of the Dedicated Branch shall be resolved by the competent corporate body of the entity registered in Argentina, which shall (i) determine its registered office; (ii) appoint representative(s) in charge of the administration of the Dedicated Branch; (iii) allocate the amount of capital; and (iv) describe its sole purpose.
  7. Additional requirements: In addition, Dedicated Branches will have to fulfill the following requirements:
  • Evidence the good standing of the parent company registered in Argentina at the time of its incorporation
  • Request the authorization of the corporate and accounting books
  • Register future amendments to the incorporation instrument with the Public Registry

Cancellation of Dedicated Branches

Dedicated Branches may request their cancellation upon:

  1. The fulfillment of the project for which they were incorporated
  2. The decision to not comply with or discontinue the project

Spanish version

Contact Information
Geraldine Mirelman
Partner
Buenos Aires
Read my Bio
geraldine.mirelman@bakermckenzie.com
Victoria Holze
Associate
Buenos Aires
victoria.holze@bakermckenzie.com

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