Electric Energy: Submission Rules for the Renewable Energy Projects

1. Renewable Energy Promotion Regime. Background

Law No. 26,190, published on January 2, 2008, (see “Measures adopted to tackle energy supply contingencies in 2008” at Marval News # 69) and Decree No 562/2009 published on May 9, 2009 (see “Electric Energy Generation from Renewable Sources Promotion” at Marval News # 83) approved and regulated the National Regime of Incentives for the use of renewable energy sources directed to power generation (the “Regime”).

The renewable energy sources included in the Regime are wind; solar; geothermal; tidal; hydraulic (power plants up to 30 MW); biomass; exhaust gases and biogas (with the exception of uses foreseen in Law No 26,093.

The tax benefits (the “Benefits”) included are:

a) An alternative between:

1. Anticipated refund of the VAT of the new amortizable goods used in the project. The VAT charged to the beneficiaries in concept of purchase, manufacturing or definitive import of goods, or in concept of infrastructure works, will be credited against other taxes that should be collected by the Federal Tax Authority (“AFIP”) after, at least, 3 fiscal years since the investments had been made. Otherwise, the VAT will be refunded within the lapse set in the project’s approval, in the terms and with the guarantees foreseen therein.
2. Accelerated amortization of the goods in relation with the Income Tax. The beneficiaries will be entitled to amortize the investments made after the project’s approval and pursuant to the terms provided therein. The treatment given to this amortization varies according to the moment when the investments are made: within the first, second or third twelve months after the project’s approval. This option is subject to the condition that the goods remain in the project’s owner patrimony for at least 3 years.

b) The goods related to the projects will not be considered for the Minimum Supposed Income Tax.

2. Submission Procedure

Companies applying for the Befits must fulfill the requirements of Section 8, Decree No. 562/2009 and file a statement declaring that the tax benefits requested were not financed by the special regime entered into by Law No. 23,360.

In order to comply with the requirements of Decree No. 562/2009, petitioners must also submit as sworn statement:

1. Evidence of the actual generation of real jobs that project would entail, detailing whether they are full-time or part-time;
2. A waiver to all actions and rights related to Decree No. 1043 of April, 30, 2003;
3. A declaration that they are not included in Section 11, subsection a), b), c) and/or d), Law No 26,190.

The fulfillment of tax and social security duties may be proved with a good standing tax certificate issued by the Federal Tax Authority. The certificate must be considered valid until the Federal Tax Authority informs a due debt. If petitioners were under any debt regularization plan or any moratorium they must prove its due fulfillment.

3. Guarantees

Beneficiaries must give the following guarantees:

1. On the implementation of the project: 10% of the tax benefit sought. The guarantee shall be given within 15 working days from finalized the project submission. Otherwise, the project shall be considered as not filled in. When it is requested the VAT early repayment, the guarantee shall be given after proved the guarantee on the tax benefit achieved.
2. On the tax benefit achieved: 100% of the tax benefit achieved as VAT early repayment. It shall be given at least 10 working days before the petition.

In both cases, guarantees may be given by bank deposit, check certified by banks, securities issued by Federal Government, bank guarantees or insurance bonds.

4. Award of Benefits

The Benefits will be awarded by the Ministry of Federal Planning, Public Investment and Services on the basis of internal reports performed by different public agencies.

Once the Benefits are granted, beneficiaries comply with several information duties regarding investment and project completion.