Tax Matters in the Labor Modernization Law

Law 27802 on Labor Modernization was published in the Official Gazette on March 6, 2026, introducing new developments in tax matters. In particular, the Law creates an Incentive Regime for Medium-Sized Investments (RIMI) and establishes amendments to tax laws to reduce taxpayers’ tax burden.

Incentive Regime for Medium-Sized Investments

The RIMI is created to promote investment in Argentina by granting tax benefits.

Eligible taxpayers

Micro, Small, and Medium-Sized Enterprises (up to Medium – Tier 2) may adhere to the RIMI if they carry out productive investments in Argentina within the first two years as of the date the RIMI enters into force, as established by the implementing regulations.

Productive investments

“Productive investments” are defined as those made in Argentina for:
 

• the acquisition, production, manufacturing, and/or importation of new movable assets, excluding automobiles, subject to depreciation for income tax purposes,
• the execution of works related to the development of productive activities.

Investments in financial assets, portfolio assets, and inventory are excluded from the RIMI.

Productive investments are deemed made in the fiscal year in which they begin operating and are allocated to the production of taxable income.

Minimum investment amounts

The Law establishes minimum investment thresholds according to the size of the investing company to access RIMI benefits:
 

Micro	USD 150,000
Small	USD 600,000
Medium – Tier 1	USD 3,500,000
Medium – Tier 2	USD 9,000,000

Notwithstanding this, productive investments in irrigation systems and/or equipment, high‑efficiency energy assets, anti-hail nets for the agricultural sector, and livestock assets will be eligible for promotion, regardless of the investment amount involved.

Tax benefits

Taxpayers adhering to the RIMI will enjoy the following tax benefits:
 

• Income tax: the RIMI allows taxpayers to opt for an accelerated depreciation regime for productive investments, starting from the moment the asset becomes operative.

This mechanism enables earlier recognition of deductions for tax purposes, reducing the fiscal burden during the initial fiscal years following adherence to the regime. Once the option is exercised, it must be reported to the Tax Authorities and applied—without exception—to all productive investments made under the RIMI.
 

• Value-Added Tax (VAT): the RIMI allows refunding VAT credits generated by productive investments, starting from the third fiscal period following the period in which such credits become eligible for deduction.
   

This benefit is particularly advantageous for projects with prolonged investment phases that do not generate sales and therefore take longer to offset VAT credits. In such cases, input VAT often becomes a significant financial cost, especially since it is not updated by inflation. Thus, the RIMI mitigates the financial impact derived from the accumulation of VAT credits during the initial stages of investment projects.

Exclusions

Among other exclusions, taxpayers will not be eligible for the RIMI if they have outstanding, enforceable, and unpaid tax, customs, or social security debts, or if they have adhered to the Incentive Regime for Large Investments (RIGI) or other incentive regimes in connection with the same investments.

Asset permanence and revocation of benefits

Assets must remain in the beneficiary’s patrimony for two years. Disposing of them early results in losing the benefits, except in cases of replacement, force majeure or fortuitous event, or when one-third of their useful life has elapsed.

Revocation requires repaying refunded VAT credits and/or underpaid income tax, plus interest and a penalty of up to twice the amount of the benefit obtained, as determined by Tax Authorities.

Amendments to tax laws
 

1. VAT

• Electricity supply: a reduced 10.5% VAT rate is introduced for electricity used in irrigation systems and/or equipment for the agro-industrial sector.
   

2. Income tax

• New index for adjusting losses: the Law establishes that losses incurred in fiscal years beginning on or after January 1, 2025, will be adjusted based on the Consumer Price Index.
• New index for adjusting for inflation: the Law establishes that the adjustment for inflation generated in fiscal years beginning on or after January 1, 2025, may be according to the Consumer Price Index issued by INDEC (the Wholesale Prices Index is then replaced).
• Term deposits: the exemption applicable to interest from term deposits, previously limited to deposits in local currency, is extended to deposits in foreign currency. This amendment applies to fiscal years beginning on or after January 1, 2026. This exemption applies to resident individuals and non-resident beneficiaries (individuals or entities), provided they are not located in non-cooperative jurisdictions (or using funds originating from such jurisdictions).
• Rental of residential property: income derived from leasing residential real estate is exempt for fiscal years beginning on or after January 1^st, 2026. This benefit applies to both resident individuals and resident legal entities.
• Transfer of real estate: income from the disposal of real estate and the transfer of rights over real estate is exempt for transfers occurring on or after January 1^st, 2026. This exemption applies to both residents and non-residents individuals.
• Foreign individuals with Argentine citizenship: foreign individuals who obtain Argentine citizenship by naturalization as a result of having made significant investments in the country will not be considered tax residents solely due to such naturalization, except when they were already permanent residents when acquiring citizenship through investment.

Reduction of the tax burden

Taxes that have shown limited effectiveness and operational complexity are amended or repealed:
 

• Internal taxes applicable to insurance, mobile and satellite telephone services, luxury goods, motor vehicles and engines, recreational or sports vessels, and aircraft are repealed.
• The audiovisual sector tax structure is reorganized, eliminating levies on cinematographic shows and videograms.

Pending regulations

Regulatory provisions from the Federal Executive Branch and Tax Authorities are still pending issuance.