RIGI and Business Restructuring

The Large Investment Incentive Regime (RIGI) offers benefits to ease the setup of a single project entity (VPUs) and the transfer of assets for developing a project. It also establishes special rules for reorganizing these VPUs once they have joined the RIGI.

Consequently, corporate reorganizations carried out to establish a VPU or invest in computable assets can be made tax-free—following article 80 of the Income Tax Law (ITL)—with certain modifications that aim to simplify the corresponding requirements.

The most relevant aspects include:

Simplification of requirements. Tax-free corporate reorganizations may be carried out with the following modifications:

1.    The continuing entity or entities are not required to continue the business of the restructured company or companies.

2.    It will not be necessary to have the Argentine Tax Authority’s prior approval when, due to the nature of the reorganization, the total transfer of the restructured company or companies does not occur.

3.    The tax effects in article 80 of the ITL are not subject to the fulfilment of the publicity and registration requirements established in the Argentine Companies Law 19550. However, this requirement may have to be fulfilled with corporate rules.

4.    The requirements in the second paragraph of article 172 of the ITL’s regulatory decree will not apply (ongoing business, related, or development of similar activities, among others).

Companies in the process of reorganization opting to adhere to the RIGI as a VPU. These companies must provide the legal instrument reporting this situation. Then, they must also include the definitive instruments and their registration in their corresponding commercial registries.

Acquisition of companies as “qualifying assets” and subsequent merger with the VPUs for the acquisition of quotas, shares, and/or participations in another company to be considered computable assets for the purposes of RIGI membership. The acquired company must merge with the VPU within 180 calendar days.

Mergers between VPUs and acquisitions of existing projects. It is possible to merge VPUs and/or acquire existing projects to form a single project. In this case, VPUs owning a RIGI Project cannot carry out acquisitions and/or mergers that do not involve an “extension” of the existing project. If the merger or acquisition involves two or more member projects, it will require the enforcement authority’s approval to form a single project.