Differentiated Tax Treatment for the Import of Certain Goods for the Oil & Gas Industry

El objetivo del Decreto N° 927/2013 es promover la incorporación de nuevas tecnologías que contribuyan al mejoramiento de las actividades de exploración y explotación de hidrocarburos.

Law No. 26.741, which was published in the Official Gazette on May 7, 2012, will probably be remembered in Argentine history, as it enabled expropriation of fifty- one percent (51%) of YPF S.A.’s shares, establishing the company as a public utility.

The Law also established as a matter of public interest, and as one of the most important national goals, the achievement of oil & gas self-sufficiency, along with exploration, exploitation, industrialization, transport and trade.

Pursuant to the Law, one of the ultimate goals is to foster introduction of new technologies which might contribute to the improvement of exploration and exploitation activities, along with encouraging technology development within the industry.

In line with this policy, the National Executive Branch passed Decree No. 927/2013, which created a “Differentiated Tax Treatment” for some goods to be introduced to oil & gas activity.

The tax benefit involves a reduction of the extra-zone import duties (DIE) applicable to some goods, provided they have been declared as fundamental for performance of the investment programs of the companies registered with the “National Registry of Oil & Gas Investments.”

It is worth mentioning that the reduction of the DIE is applicable to both new and used goods (1) and that the aforementioned regime will apply, for the time being, until June 30, 2014.

The regime is complemented by Resolution No. 35/2013, passed by the Committee of Planning and Strategic Coordination of the National Plan for Oil & Gas Investments, which provided for the procedure that must be followed by interested parties so as to be eligible for the Differentiated Tax Treatment provided by Decree No. 927/2013.

The most important aspects of the regulations are as follows:

1. Applications to become eligible for the “Differentiated Tax Treatment” must be filed in paper and digital formats and must be signed by interested parties or their representative or proxy;
2. Those parties filing the applications shall be registered with the “National Registry of Oil & Gas Investments;”
3. All applications must specify, among other information, (i) the name of the importer (should it not be the company which is submitting the application), (ii) the equipment (indicating the manufacturer, source country, model, etc.), (iii) tariff number/s involved, (iv) technical features of the goods to be imported, (v) the relevance of the new equipment within the “Program of Oil & Gas Investments”, (vi) the licensed area in which the equipment is to be used, and (vii) the lack of national manufacturers and or the absence of harm to their potential development.
4. Once the application is received and all clarifications and/or corrections are done (if any), the application shall be sent to the Ministry of Industry for it to determine whether or not the goods are manufactured by local manufacturers or whether there might be harm to any potential sustainable development of national manufacturers.
5. If the goods in question are manufactured within the country, the Ministry of Industry must inform the interested party of the names of the companies which manufacture the product within the country, along with availability of the product, delivery time, price and other such relevant information.
6. In addition, the Secretariat of Economic Coordination and Competitiveness Improvement shall issue a technical report.
7. After this step, the Committee of Planning and Strategic Coordination of the National Plan for Oil & Gas Investments shall issue an opinion regarding the request to become eligible for differentiated tax treatment, taking into account the opinion of the Ministry of Industry and of the aforementioned Secretariat.
8. With the purpose of becoming eligible for Differentiated Tax Treatment, the interested party must be notified regarding the opinion, which shall then be presented before the Customs Authority in order to make it enforceable when performing the import.