Investment in Argentina: Mining
Law No. 24196, enacted in 1993, establishes special incentives for the mining activity (excluding oil and natural gas, which are governed by Hydrocarbons Law No. 27007).
However, it includes a number of connected activities, such as crushing, cutting, palletizing, etc. if carried out by the mining company. The benefits are guaranteed for 30 years and mainly relate to income tax.
Activities such as prospecting, exploration, special mineralogy, metallurgy, feasibility and pilot plant studies may be fully offset against taxable income, and also may be amortized for tax purposes (it works as a double tax deduction).
Investments in infrastructure and in machinery, equipment and vehicles may be amortized/ depreciated on an accelerated basis for tax purposes. These bene ts are subject to a number of conditions. There is a system that provides for the advanced refund of the Value Added Tax payable on the imports of depreciable movable assets and on the investment in infrastructure for the mining industry.
Once the holder of an exploration permit has found minerals, a written request (declaration of discovery) must be led with the related authorities (provincial or federal, as applicable). The authorities shall grant an exploitation concession, giving the holder a perpetual property right on the mine, subject to the payment of an annual fee (royalties levied by the provinces should not exceed 3 % of the value of the minerals extracted) and the requirement of a minimum investment.
Recently, Executive Decree No. 349/2016, issued in February 2016, eliminated the duties imposed by the Government on mining exports for the purpose of promoting investment in this sector. This measure was accompanied by the so called Federal Mining Agreement (in Spanish, AFM), which has been signed by most mining provinces (except for La Pampa and Chubut) to channel and increase investments in the sector, by updating the regulatory framework applied so far (i.e. Mining Law No. 24196 of 1993).
The AFM is aimed at:
i) establishing general criteria to determine the royalties paid by extractive industries (which are set at 3 % of the pithead value);
ii) establishing an additional tax of 1.5 % of the pithead value for the creation of a provincial fund aimed at the nancing and development of environmental and water control works (Provincial Infrastructure Fund);
iii) laying the foundations for the execution of regional agreements to encourage investments in such works;
iv) establishing that concession agreements shall be in force until there are minerals available in the eld, and that the tax conditions set out shall apply for a period of 30 years (pursuant to Law No. 24196);
v) creating a cadastral organization for mining purposes; and
vi) tightening sanctions to be imposed on companies that fail to comply with environmental regulations.
Finally, it shall be considered that Mining is an always latent investment opportunity in Argentina, as there are ample mineral reserves such as copper, gold, silver and lithium. Mining opportunities add up to more than USD 30 Bn.
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