Global Tax Alert | 19 July 2013

Argentina's new promotional investment system for the oil and gas industry

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The Argentine Executive Power issued Decree N° 929/2013 (published in the Official Gazette on 15 July 2013), establishing a new system to promote investments in the oil and gas industry.

The benefits of this system can be requested by those entities enrolled at the “National Registry of Oil & Gas Investments” that: (1) are holders of hydrocarbon exploration permissions and/or holders of hydrocarbon exploitation concessions and (2) present a project that entails an investment of no less than USD 1,000,000,000 for the first five years of the project.

Under the new system, from the fifth year of the beginning of the project, entities will be able to export 20% of the hydrocarbon production without paying export duties. In addition, exporters will benefit from the possibility of freely disposing of 100% of the foreign currency obtained from such exports (i.e., they will not be obligated to bring the foreign currency into the country), to the extent that during the project an amount of no less than USD 1,000,000,000 was brought into the country and entered into the Argentine financial system.

If internal demand cannot be met by the national hydrocarbon production, entities will not be allowed to export 20% of their hydrocarbon production. However, those entities will be allowed to charge the export price on the domestic sales of the referred 20% hydrocarbon production. In addition, the abovementioned entities will have the right to purchase foreign currency in the official exchange market for up to 100% of the price obtained due to the commercialization in the local market of said 20% production.

Eligible entities will have to apply for the benefits by filing the corresponding investment projects with the corresponding application authorities.

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP, Latin American Business Center, New York
  • Alfredo Alvarez
    +1 212 773 5936
    alfredo.alvarez@ey.com
  • Pablo Wejcman
    +1 212 773 5129
    pablo.wejcman@ey.com
Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires
  • Carlos Casanovas
    +54 11 4510 2270
    carlos.casanovas@ar.ey.com
  • Gustavo Scravaglieri
    +54 11 4510 2270
    gustavo.scravaglieri@ar.ey.com
  • Ariel Becher
    +54 11 4510 2270
    ariel.becher@ar.ey.com
  • Pablo Baroffio
    +54 11 4510 2270
    pablo.baroffio@ar.ey.com

EYG no. CM3656