Investments for Electric Energy Production: Advance VAT Refunds

1. Introduction

On January 2, 2008, Law No. 26,190 (the “Law”) was published in the Official Gazette, by means of which the National Program for the Use of Renewable Resources for the production of Electric Energy (the “Program”) was created. It was later modified and complemented by the Law No. 27,191 and Decree No 531/2016 (the “Decree”).

The Law was created to promote investments in the use of renewable resources for the production of electric energy-related ventures throughout Argentina.

In that context, in section 9 the Program provides for certain tax benefits including, the advance refund of Valued Added Tax (“VAT”).

Accordingly, the Decree determined that, for taxpayers registered for VAT, the tax will be cleared against other taxes collected by the Argentine Tax Authority (“Tax Authority”), or refunded when there is no balance payable corresponding to other national taxes, regarding the purchase, fabrication, elaboration or definitive import of new capital goods or the execution of infrastructure works.

Along this line the  Tax Authority issued General Resolution N°4101-E/2014 (the “Resolution”), by means of which it regulated the procedure to request the clearance and/or advance refund of VAT under the Program (the “Procedure”).

Below please find the main aspects of the Resolution which must be taken into account to request the aforementioned benefits.

2. Main Aspects

The Resolution establishes that, to access the benefit, taxpayers must be registered as taxpayers for VAT, and must have undertaken investments in endeavors related to the use of renewable energy resources destined specifically to the production of electric energy.

Furthermore, taxpayers must have previously obtained a Certificate of inclusion in the “Renewable Energy Promotion Program” and must have successfully requested the advance VAT benefit under said Program. Similarly, this procedure will be applicable to VAT invoiced to owners of projects related to the supply agreements between the Electricity Wholesale Market and the generation and energy availability offers related to renewable resources.

Other requirements for the collection of the benefits are:

1. Requirements related to the Program

1. Have the relevant investment project approved by the Ministry of Energy and Mining.
2. Have the project expenditures approved by the Renewable Energy Undersecretary office under the Ministry of Energy and Mining.
3. Have the capital assets included in the project owner’s estate by the issuing of the request.
    

2. Operational requirements:

1. Hold an active Tax ID (CUIT).
2. Be in good standing for both VAT and Income Tax
3. Updated tax address.
4. Have the “Economic Activity Classifier” up to date.
5. Have submitted tax returns regarding income tax, minimum presumed income tax, personal assets tax, VAT and social security resources.
6. Have no registered breaches in the filing of information affidavits.
7. Submit a guarantee equivalent to 100% of the amount of each clearance and/or early refund request.

The Procedure states that, to begin the procedure, taxpayers must submit copies of invoices or similar proof as backup of the transactions that generated the VAT intended to be cleared and/or recovered.

The clearance and/or advance refund of VAT will be accepted as long as the relevant amount has not been absorbed by fiscal debits after, at least, one or three fiscal periods, depending on the benefit requested, has elapsed.

Filings can be made as of the 21st day of the month when the affidavit’s expiration occurs.

Where a filing is incomplete or when the information contained therein is formally incorrect, an administrative judge will intervene and will require the omissions to be corrected.

After 6 days of the filing, if no inconvenience arises, the filing will be considered formally admissible.

Excluded taxpayers are (i) declared bankrupt, (ii) accused or criminally reported by the Tax Authority, (iii) formally accused or criminal defendants for tax derived felonies, and (iv) legal entities whose body members have been criminally accused by the Tax Authority.

The Resolution entered into force from the date of publication in the Official Gazette and will be applicable to requests made as of the second business day after said publication; i.e. August 10, 2017.