RIGI Customs Issues

Concept 

The RIGI is the Regime of Incentives for Large Investments established by Title VII of Law No. 27.742 - Law of Bases and Starting Points for the Freedom of Argentines. Through this means, the government intends to attract investments, for which it offers future investors specific tax, customs and exchange benefits. It also ensures that the incentives offered will not be altered by subsequent repeals of the referred law or by tax, customs or exchange regulations that are respectively more burdensome or restrictive than that contemplated in the aforementioned law. 

Priority objectives pursued by the State through the RIGI 

The State mainly seeks to attract investments to the Argentine Republic to promote national economic development, enable the development of certain industries that could not be developed otherwise, encourage the growth of local production chains, favor job creation and, as far as we are concerned, increase the export of goods and services included in the sectors of interest promoted by the RIGI -forest industry, tourism, infrastructure, mining, technology, steel, energy, oil and gas-.

Customs Benefits 

First, art. 193 of the law provides that beneficiaries, investors qualified as vehicles holding a single project -VPU-, may freely import and export merchandise for the construction, operation and development of the project attached to the RIGI. Consequently, in this framework, they will not be affected by: “…direct prohibitions or restrictions, quantitative restrictions, quotas or quotas of any kind, or qualitative restrictions of an economic nature. Nor may official prices or any other official measure that alters the value of imported or exported goods, or supply priorities for the domestic market, be applied to them, even when these are provided for in the legislation in force at the date of accession and unless they are expressly and specifically included in the approval by the implementing authority of the application for accession and the investment plan submitted.…”. It is explained that: “…The following shall be considered to constitute direct prohibitions or restrictions on imports or exports of an economic nature, within the terms of this article: advance sworn declarations, automatic and non-automatic licenses, import certificates, import or export monitoring systems and any other declaration, intervention, administrative act or presentation of a nature prior to the registration of the import clearance or the export shipping permit that requires approval, authorization, validation or express, tacit or systemic authorization by the State. Measures that require the presentation of certificates of origin shall also be considered direct restrictions, except when the origin of the merchandise whose import is requested entitles it to the application of tariff preferences or differential treatment, or when said merchandise is subject to the application of antidumping, compensatory or specific duties, or to safeguard measures.…”. It also provides that: “…Any restriction and/or affectation in the terms of the preceding paragraphs will be considered a violation of the provisions of article 165 of this law.…”. In turn, this rule states: “…Any rule or de facto action by which the provisions of this title are limited, restricted, violated, hindered or distorted by the Nation, the provinces, themselves and their municipalities, and the Autonomous City of Buenos Aires, which have adhered to the RIGI, will be absolutely and irremediably null and void and the competent Justice must immediately prevent its application.…”. The following comments emerge from the transcript: 

a.- The customs legal terms “prohibitions” and “direct restrictions” are synonyms. Thus, in the Statement of Reasons of the Customs Code it is indicated that “direct restrictions” are those that “directly prevent import or export”. Therefore, in the article under comment it would have been appropriate to state that VPU will not be covered by “direct prohibitions or restrictions” instead of “direct prohibitions or restrictions”. However, the legislative technique used is accentuated when in the course of the same article, automatic licenses, import certificates, any type of declaration, intervention, administrative act or presentation of a prior nature to the registration of the import clearance or the export shipping permit that requires approval, authorization, validation or express, tacit or systemic authorization by the State or, in certain cases, certificates of origin are defined as direct restrictions; when in all these cases we are dealing with “indirect restrictions” on import or export. This characterization, by which customs prohibitions are equated with indirect restrictions, while protecting future investors, leaves current investors unprotected - importers and exporters - since it seems to throw overboard years of jurisprudence settled by the Supreme Court of Justice of the Nation through the leading case "Nate Navigation": "...To sustain the argument of the defendant (DGA), in that Resolution 909/94 and its amendments... exclusively established a prohibition regime, would imply... elevating to such a category all restrictions and simple conditions for the export or import of goods…”; “…All customs operations must be carried out following the established guidelines regarding schedules, methods, administrative procedures, declarations and payment of the corresponding taxes and other well-known requirements of such a delicate regime. But this cannot imply the inversion of the fundamental rule enshrined in art. 19 of the National Constitution, thus elevating such requirements to the level of prohibition.… ”(in d “Nate Navegación”, judgment of 12/06/12, in which the CSJN adopts the opinion of the PGN). With the new rule, on the other hand, an interpreter could consider that the legal terms referred to -prohibitions, automatic licenses, certificates of origin, etc…- are comparable -not only with respect to the RIGI- and thus argue that whenever an indirect restriction is not complied with, a prohibition will be breached. Interpretation that according to our Supreme Court violates the Principle of Legal Reserve, since no one is deprived of doing what the law does not prohibit (conf. art. 19 of the CN). Consequently, it would not be appropriate to create legal security for new investors by creating insecurity for existing investors, as this could lead to the distrust that is being sought to be eradicated.. Finally, this would lead us to ask ourselves about the suitability of the means used to achieve the intended end. 

b.- It seems that in the face of successive arbitrary practices developed in Argentina regarding import licenses, it was decided to include them within the concept of “prohibitions”; although they are not in supranational legislation or in the Customs Code. In some way, what was sought was to guarantee that our country would refrain from carrying out such practices. In the most emblematic case, let us remember that RG No. (AFIP) 3252/12 was opportunely in force, through which a system of automatic import licenses called “DJAI” (Advance Affidavit of Importation) was established. Through this, the administration had as its objective, at least as expressed in the recitals of the norm, to have advance information on the merchandise that was intended to be imported for consumption. Under this import licensing regime, importers had to declare in advance on the AFIP website certain information related to the merchandise to be imported. The information collected was then made available to various government agencies that, within certain time frames and with sufficient justification, had to issue a decision on the importation of the intended merchandise. If the DJAI in question was “observed” by some body – e.g. the Ministry of Commerce – the import for consumption could not be registered in the Customs Computer System, since this computer system required an approved DJAI to continue with the procedure. In practice, the intervening agencies systematically observed the DJAIs without justification and indefinitely. Such administrative arbitrariness resulted in “de facto prohibitions” and led to multiple lawsuits by several Members of the World Trade Organization before its dispute settlement bodies (40 countries, including those that make up the European Union, the United States and Japan). Finally, our Nation was condemned in the WTO2. The Appellate Body that confirmed the Report of the Special Group, held: “…The fact that the DJAI procedure does not automatically give rise to a right to import supports its finding that the DJAI procedure constitutes a restriction on imports.…”. Ultimately, the WTO (1) understood that the DJAI Regime and mainly its administration violated the provisions of Article XI, paragraph 1 of the GATT, according to which: “…Neither Contracting Party shall impose or maintain - other than duties, taxes or other charges - any prohibitions or restrictions on the importation of any product into the territory of another Contracting Party…whether enforced by…import licensing…or by other measures.... ".

c.- The benefit does not include any economic prohibitions or restrictions in force and expressed in the approval by the implementing authority of the application for membership and the investment plan submitted. 

d.- Non-economic prohibitions in force and already legislated are not included in the benefit either. The latter is obvious given that, based on the eventual irreparability of the legal assets that are ultimately protected through these prohibitions - e.g. public health, the environment, etc. - this type of concession cannot be made.

e.- Finally, with respect to the benefits included, any restriction and/or affectation that limits, restricts, violates, hinders or distorts them by means of a norm or de facto action, will be absolutely and irremediably null and void; the competent Justice will be instructed to prevent its application immediately. The latter, in order to be applicable, must have, on the one hand, expedited procedures arranged for this purpose according to the jurisdiction and, on the other, possibly, agreements of the corresponding Judicial Powers. 

Secondly, very broad guarantees are granted with regard to the supply, transport and processing of inputs for exports corresponding to the participating projects. In this sense, the VPUs are assured that they will not be affected by “regulatory restrictions” on such inputs, including within this type of restrictions those motivated by internal supply priorities or regulatory rights in favor of other sectors of demand. Note that the broad scope of the terms used is not limited to customs restrictions. 

Thirdly, the importation for consumption and the temporary importation of new capital goods, spare parts, parts and components for the participating projects is facilitated, exempting the VPU and its suppliers from import duties, statistical and destination verification fees and from any regime of perception, collection, advance or retention of national and/or local taxes that may be applicable. However, art. 190 states: “…Imports of new capital goods, spare parts, components and consumer goods, as well as temporary imports carried out by the VPU adhering to the RIGI, will be exempt from import duties, from the destination statistics and verification rate, and from any system of perception, collection, advance or retention of national and/or local taxes.…”. The transcribed rule gives rise to different options for interpretation that the regulations will surely clarify. It seems that what has been meant is that all merchandise that is imported for consumption or temporarily, as long as it is affected by the investment project attached, will enjoy the aforementioned tax exemptions. The only requirement expressly provided is that, in the case of capital goods, these must be new (2). It is added that any “imposition” contrary to the above will be considered null, of absolute and incurable nullity and the competent Justice must immediately prevent its application in accordance with art. 165.

Fourthly, exports are facilitated, since after three years from the date of joining the RIGI, exports for consumption of goods obtained under the promoted project are exempt from export duties. In the case of holders of projects declared as long-term strategic export projects, this period is reduced to two years. On the other hand, collections of exports of products from the RIGI-adhered project made by the VPU are exempt, in certain percentages, from the obligation of entry and/or negotiation and settlement in the exchange market. The corresponding percentages depend on the date of implementation of the VPU. After: a) 2 years, 20% is exempted; b) 3 years, 40% is exempted; c) 4 years, 100% is exempted. In the case of the collection of exports -by products- referred to in the first paragraph of this article made by VPU holders of Projects declared as "Long-Term Strategic Exports", the indicated terms are reduced: a) 1% is exempted for 20 year; b) 2% is exempted for 40 years and c) 3% is exempted for 100 years. The funds corresponding to the referred percentages will be freely available and these benefits will be applied unless the exchange market regulations are more favorable in such periods. 

Temporal scope of the normative stability offered 

VPUs adhering to the RIGI will enjoy, with regard to their projects, regulatory stability in tax, customs and exchange matters. Accordingly, the incentives granted may not be affected by the repeal of this law or by the creation of tax, customs or exchange regulations, respectively, that are more burdensome or restrictive than those contemplated in the RIGI. This stability will be valid for 30 years, computed from the date of adhesion. Starting from the fiscal year immediately following the expiration of said term, the RIGI will no longer have stability for the adhering VPU and may be modified by the general regulatory, tax, customs and exchange regime. In the case of projects that are declared “Long-Term Strategic Export” and that are executed in successive stages, said term may be extended by the authority enforcing the law; all of which must be expressed in the administrative act approving the application for adhesion and the investment plan. In such a case, the stability for each stage of the project may be extended up to 30 years after the estimated start-up date, provided that the minimum investment commitments provided for in paragraph a) of article 172 are met for the first stage. However, in no case will the stability of the successive stages extend beyond 30 years from the tenth year after the start-up of the first stage of the project.

However, in order to enjoy such stability, it is essential to remain in the RIGI for the periods mentioned. In turn, such permanence will depend on compliance with the conditions provided for in Title VII, as well as those established by regulation. With this, the regulatory route acquires considerable importance.

Scope of tax and/or tax-customs stability

The benefits granted by this law are based on art. 75, inc. 18) of the National Constitution (art. 165 of the law). The same text of the aforementioned paragraph qualifies them as "privileges" since they alter the generality with which taxes must be applied. In turn, according to art. 16 of the CN, equality is the basis of taxes and public charges, and must be applied in such a way that it fully covers the categories of persons or assets provided for by law and not just a part of them (Rulings: 307:1083). For this reason, the Court has interpreted this type of benefits in a restrictive manner, adhering to the letter of the law as the first source of interpretation. 

Likewise, art. 202 of the law guarantees that new taxes created and/or increases in existing taxes regulated from the date of adhesion to the RIGI will not be applicable to VPUs. However, VPUs may benefit from the future elimination of taxes or reduction of rates in force on the date of adhesion. 

In this context, what is provided for by this regulation is far from what happened in the case of the “Investment Regime for Mining Activity” -Law 24.196 and Decree No. 2.686/93-, in which, unlike the present regime, It ensured that the “total tax burden” would not be affected. En el leading case “Minera del Altiplano SA v. National State- PEN and Another s/ amparo” (Case M.13 7, L.XLVI) the Attorney General of the Nation, through the opinion dated 07/04/2011 to which the Supreme Court of Justice of the Nation adhered, stated: “…Since Minera del Altiplano SA is included in the benefits of fiscal stability enshrined in Article 8 of Law 24.196, it can be concluded that it only has the right - after justifying and proving, in each case, with the necessary and sufficient means, that there has actually been an increase in its "total tax burden" (see Article 8, paragraph 5 of the Law) - to request compensation or refund of the excess amounts paid, in the manner established in Article 4, paragraph c) of Annex I of Decree 2.686/93. It is therefore unacceptable that now, through this amparo action, it seeks to rise up against the scope of the benefit and the procedure to which it voluntarily submitted to assert it, to obtain a sort of exemption from new taxes or increases in existing ones, when this was not what was agreed in the regime (arg. Rulings: 225:216; 285:410; 299:221; 307:1582; ​​314:1175, among others). It is not lost on my analysis that it could be argued that a more convenient legal formula to guarantee the fiscal stability of the promoted companies would have been to completely exclude them from the payment of future taxes or their increases.…”(3) 

However, although the tax benefits granted differ from what occurred in the “Minera del Altiplano” case, the notion of total tax burden should not be completely discarded in the understanding of this law, since art. 196 provides for a hypothesis of exclusion of tax benefits that contemplates it: “…The tax incentives granted through this regime will not produce effects to the extent that they could result in a transfer of income to foreign tax authorities through the application of a global minimum tax – whether through a profit inclusion rule, a low-tax payments rule or any other analogous measure – that implements or is aimed at implementing, in whole or in part, the second pillar of the Inclusive Framework of the Organisation for Economic Co-operation and Development and the G-20 on base erosion and profit shifting…”. Given the generality of the rule, all tax incentives granted are included, whether of a tax or customs nature. However, the burden of proof of this minimum total tax burden could become a matter of controversy, as well as the judicial route that should be used in the event of such benefits being denied. To clarify this last point, art. 202 ultimately provides: “…It shall be the responsibility of the VPUs that invoke a violation of tax stability to justify and prove said violation in the sense and with the scope arising from the provisions of this article. However, when the violation is a consequence of the creation or increase of a new tax or a legal or regulatory modification of any aspect related to the taxes in force at the date of accession, it shall be the responsibility of the Federal Public Revenue Administration to justify and prove, in each case, that there has not been an increase in the tax burden as a precondition for applying said tax or the higher rate to the VPU.…”(5)

On the other hand, the article in question stipulates that it will be understood that there is an "increase in taxes stabilized under the RIGI and not applicable to the VPU" when: a) the rates, fees or amounts are increased; b) exemptions are totally or partially repealed or activities or goods not taxed on the date provided for in the first paragraph of this article are taxed; c) the mechanisms or procedures for determining the taxable base of a tax are modified, by means of which guidelines or conditions different from those that were set at the time when the VPU adhered to the RIGI are established and which mean an increase in said taxable base (5), or d) situations that were excepted or not covered are incorporated into the scope of a tax. 

Finally, the tax stability benefit grants VPUs adhering to the RIGI the right to reject any claim by the AFIP for amounts that exceed the tax payable under the preceding paragraphs. If, nevertheless, the VPU pays the amount that was not due, the tax stability benefit will enable the VPU to use it as a tax credit and may immediately apply it to the cancellation of any other national tax. 

Proper and improper use of the incentives granted 

The beneficiary of the RIGI undertakes to make proper use of the incentives granted. This obligation includes the following aspects: a) the incentives may only be used by the VPU(6) exclusively with respect to the affiliated project. The VPU may not own or develop other activities or projects other than the affiliated project. Without prejudice to this, VPUs may merge and/or acquire already affiliated projects in order to form a single affiliated project; b) the assets that have been computed for the purposes of compliance with the minimum investment amount must remain assigned to the affiliated project that is the subject of the approved investment plan for the end of its useful life or until the end of the stability period or the end of the useful life of the affiliated project or until the date on which permission is given by the implementing authority to de-allocate it, whichever occurs first; c) the implementing authority may authorize, at the request of the VPU, the de-allocate of assets for the duly justified sale and replacement operations provided for in section b) of art. 183 as long as the amount invested in the replacement is equal to or greater than that obtained from the sale. 

For this reason, the ownership, possession, holding or use of the benefited merchandise, except for the inputs used for production, cannot be transferred, unless said transfer is made to another VPU adhering to the RIGI; which must be notified to the application authority within fifteen calendar days after the transfer has occurred. The interpretation of this obligation should be clarified by regulation and it would be convenient for the administrative act approving the investment project to specifically indicate in each case what is considered an “input”. The interpretative hypotheses that arise from the rule are the following: a) it could be understood that the inputs can only be transferred from VPU to VPU; b) it could be thought that the inputs can be subject to transfer from VPU to Subjects that are not VPU or c) it could be considered that any merchandise that is benefited, whether it is an input or not, can be transferred from VPU to VPU. 

Failure to comply with the obligation in question will result in the application of the sanctions provided for by this regime, beyond any possible customs, tax or exchange liability that may apply.

Temporary extension of the prohibition of transfer of the benefited merchandise. Its relation to criminal action

According to the aforementioned art. 179: “…Assets that have been computed for the purposes of compliance with the minimum investment amount must remain assigned to the attached project that is the subject of the approved investment plan for the term of its useful life or until the end of the stability period or the end of the useful life of the attached project, or until the date on which permission is given by the implementing authority to de-assign it, whichever occurs first.…”. Thus, it could be the case that the prohibition of transfer of the benefited merchandise could be extended, for example, for thirty years from the date of accession - end of the general period of stability. In parallel, it is noted that despite considering that the eventual infringement that would be incurred by the early and unauthorized - irregular - transfer of the merchandise has a criminal legal nature, the prescription period of such criminal action or its eventual causes of interruption or suspension are not regulated in this regime; therefore, these issues will be governed by the Criminal Code(7) According to the provisions of its art. 4: “…The general provisions of this code shall apply to all crimes provided for by special laws, insofar as they do not provide otherwise.…”. In view of this, if there is no cause for interruption or suspension, the criminal action punished with a fine will expire two years after midnight on the day of the irregular transfer (conf. art. 62, inc. 5° of the CP). 

How does the State protect itself against the possibility of improper use of tax or customs incentives? 

Art. 182 provides: “…The regulations will establish the types of guarantees that must be required to preserve the tax credit related to the granting of tax and customs incentives to VPUs, specifically related to the improper use of incentives. Provided that the amount and solvency of the guarantee are considered satisfactory by the implementing authority, VPUs may opt for one of the following forms: a) Cash deposit; b) Deposit of public debt securities, with their values ​​computed in the manner determined by the regulations; c) Bank guarantee; d) Guarantee insurance; e) Real guarantee, in the first degree of privilege, in which case the value of the real estate or furniture in question will be established in the manner determined by the regulations; and f) Others that the regulations authorize for the cases and under the conditions established therein.... ". 

The guarantee established must then cover any potential risks to the tax credit in the event that customs or tax incentives are used improperly. For example, if the imported goods for consumption, benefiting from the exemption from import taxes, are used for a purpose other than that which constitutes the object of the approved investment project. On the other hand, in principle, such guarantee must be maintained during the validity of the tax or tax-customs actions, in accordance with the respective legislation; all of which, due to the length of the prescription periods, may end up being burdensome for the beneficiary. 

Thus, the "acquired right" that the VPU will enjoy over the incentives granted and other rights resulting from the RIGI -art. 178-, is conditioned to the fulfillment of the obligations assumed and specified upon approval of the application for membership and the corresponding investment plan. Consequently, it will depend, among other issues, on the appropriate control exercised by the application authority over the proper use of the merchandise whose import or export it has benefited from. 

Based on the above, in reality, the VPU's right to the aforementioned incentives will be consolidated once it can release the guarantees established to which we have referred and the respective tax, customs and/or exchange actions have also prescribed in accordance with such legislation. 

It is difficult to think of an acquired right, comparable to the right of property, which, if exercised, without causing harm to another, would give rise to an action of a criminal legal nature -conf. arts. 211 and 215(8)- which could be subject in turn, as we will see, to arbitration. 

Finally, in the event that the VPU intends to withdraw from the RIGI, it must, as a condition for approval of the withdrawal, have complied with the essential obligations provided for in art. 172 or pay the fine provided for in paragraph e) of art. 213(9). However, it is recognized that the concretization and continuity of the investment project depends on a variety of factors whose control is sometimes beyond the VPU and therefore the latter may, at any time, in the event of a fortuitous event or force majeure in the terms defined in the Civil and Commercial Code of the Nation, make the decision to suspend, restart and/or close it provisionally or definitively, partially or totally, without incurring liability under this law. To this end, within fifteen days of having become aware of it, it must notify in writing to the enforcement authority, the existence, causes and nature of the alleged force majeure or fortuitous event; explaining whether it gives rise to the suspension -with its estimated duration- partial or definitive closure of the project. In the event of suspension, once the impediment has disappeared, the affected VPU must immediately resume compliance with its obligations; the use and enjoyment of the incentives will be resumed.

Violations of the RIGI

Art. 211 provides for the different types of infractions: “…The following breaches of this regime and its regulatory norms shall be punishable:

a) Failing to provide or delaying the submission of information required by the enforcement authority or other competent bodies under this law. 

 b) Submit false or inaccurate information or sworn statements to the enforcement authority or other competent bodies under this law. 

 c) Failing to obtain prior and express authorization from the implementing authority in those cases where it is necessary in accordance with the provisions of the RIGI. 

 d) To remove (either by sale or re-export) goods introduced under exemptions established by the RIGI or in compliance with the obligations provided for in paragraphs a) and b) of art. 172 prior to the expiration of the periods provided for in the second paragraph of art. 179 and in the third paragraph of art. 190. 

 e) Carry out activities that do not correspond to the sole purpose of the VPU in violation of the obligation provided for in the second paragraph of art. 169, or in the case of suppliers, fail to comply with the requirements and obligations provided for them in paragraphs five to eight of art. 169. 

 f) Unjustifiably failing to comply with the obligations provided for in paragraphs a) and b) of article 172. And, 

g) Undue enjoyment of the tax, customs and exchange exemptions provided for in this regime.

Infringement Procedure 

Once an alleged infringement has been verified, the enforcement authority must notify the VPU in a reliable manner so that, if feasible, it corrects the non-compliance within thirty working days of service of the aforementioned notice. If it has not been corrected within this period or if it is an incurable infringement, the enforcement authority will proceed to the corresponding summary proceedings, notify it and transfer it to the VPU so that within fifteen working days it may present its defense and offer all the evidence it considers pertinent. Once the defense has been presented or the deadline for doing so has expired, the enforcement authority will decide on the admissibility of the evidence offered, ordering the production of that which is pertinent and rejecting by reasoned decision that which is excessive or inappropriate. Once this has occurred, if there is evidence to be admitted, a deadline will be set for this purpose which may not be less than twenty working days. Once the evidentiary period has closed, the beneficiary will be notified so that he may submit his arguments within a period of five working days. Finally, once the argument has been submitted or the deadline for doing so has expired, the enforcement authority must issue a decision on the summary within the following thirty working days. 

Applicable penalties

In turn, Article 213, through its different sections, provides for the applicable penalties. These, from lesser to greater, are aggravated in order of the seriousness of the alleged acts, without prejudice to which the possibility of their accumulation is admitted. 

a) Warning, for the cases provided for in subsections a) and b) of art. 211.

b) A fine of ten to thirty million pesos for the acts provided for in paragraph a) of article 211.

c) A fine of one hundred to four hundred million pesos for the acts provided for in subsections b), c) and d) of article 211.

 d) A fine of one to three percent of the minimum investment amount of paragraph a) of art. 172 for the acts provided for in paragraph e) of art. 211.

e) A fine of five to fifteen percent of the minimum investment amount of paragraph a) of art. 172 that is pending compliance, for the acts provided for in paragraph f) of art. 211

f) Termination of the RIGI for the events provided for in paragraph f) of Article 211, which will entail the total expiration of the RIGI incentives since the non-compliance with said obligations has been resolved in a definitive and firm manner by the competent court. 

g) Disqualification from requesting the adhesion of a new Project to the RIGI as an eventual additional and accessory sanction to that provided for in the previous paragraph, depending on the severity of the conduct, which will be effective from the moment the resolution ordering the sanction has been resolved definitively and firmly by the competent court, constituting said date the effective date of cessation; and

h) Refunds of tax, customs and exchange exemptions for the events provided for in paragraph g) of Article 211, plus compensatory interest.

Consequently, the “undue enjoyment of the tax, customs and exchange exemptions provided for in this regime” constitutes an infringement of the RIGI -conf. art. 211, inc. g)-, which gives rise to the summary procedure regulated by law and eventually to the sanctions to which it gives rise, among which is contemplated the return of the tax, customs and exchange exemptions, plus their compensatory interest; without prejudice to its accumulation with other sanctions of this infractional regime and the possibility of incurring customs, tax and/or exchange liability and also applying the penalties contemplated in these legal systems. These last aspects will surely deserve constitutional objections, in the first case for allowing the indiscriminate accumulation of sanctions in the terms of the law. Secondly, it gives rise to the possibility of duplicating the sanction in those cases in which the respective customs, tax or exchange legislation provides for the obligation to restore such exemptions as part of their penalties.

On the other hand, the fines contemplated in subsections b) and c) of article 213 in question are expected to be updated, which will be adjusted annually by the coefficient arising from the annual variation of the General Consumer Price Index (CPI), published by the National Institute of Statistics and Census. This could also give rise to constitutional objections.

Finally, it is added that the failure to comply with the obligation provided for in the penultimate paragraph of art. 180(10) It will be a cause for aggravation of the sanction in those cases in which, before the termination of the RIGI for a VPU as a consequence of non-compliance with the conditions of permanence in the RIGI, the application authority determines, without a reasonable doubt, that the VPU knew or should have known that it was unable to comply with the conditions and commitments for permanence in the regime.

Particularities 

It should be noted that the enforcement authority will have material jurisdiction to resolve the substance of the infringement issue provided for by this law, but not on precautionary aspects such as the preventive suspension of the effects of the RIGI. It is noteworthy that the enforcement authority even instructs the initiation of actions for this purpose, which may give rise to objections due to a possible double role of judge and party, which the regulations must clarify. Indeed, art. 214 provides: “…In the same resolution in which the enforcement authority orders the opening of the infraction investigation, it may instruct the initiation of the relevant actions so that the competent court may order, as a precautionary measure, in a preventive manner and until a final and firm decision is made in this regard, the preventive suspension of the enjoyment of the incentives under this RIGI. Likewise, during said period, the fulfillment of the other obligations under the RIGI will be considered suspended.... ". 

On the other hand, although cessation of RIGI constitutes one of the most serious sanctions(11) which is reached due to the unjustified non-compliance with the most important obligations provided for in the regime -conf. arts. 172, 211 inc. f) and 213 inc. f)-, can be derived from it indirectly. This would occur if, for example, there were to be an improper use of the incentives for deregistration, whether by sale or re-exportation, of goods introduced under the protection of franchises established by the RIGI or in compliance with the obligations provided for in paragraphs a) and b) of art. 172 prior to the expiration of the terms provided for in the second paragraph of art. 179 and in the third paragraph of art. 190.

Recursive paths 

The sanctions imposed by the enforcement authority on the VPU may be appealed, at the interested party's option, by administrative means - Law 19.549 - or by submitting the matter to arbitration. Likewise, if the administrative means has been chosen, the filing of appeals or challenges will not prevent their withdrawal, at any time, by the VPU to promote the arbitration claim. However, if the arbitration means has been chosen, no administrative appeals may be filed subsequently or subsequently against the same act subject to arbitration.

Furthermore, the VPU - and eventually its sanctioned supplier - are granted different procedural guarantees:

a.- Withdrawal may in no case be interpreted as a waiver of the rights that the VPU may have, nor will it prevent the arbitration claim from being made once those rights have been definitively resolved.

b.- It will not be necessary for the VPU to present prior claims or administrative challenges of any kind, nor will they have to exhaust the administrative instance in order to submit any controversy related to this regime to arbitration.

c.- No limitation period shall apply to the initiation of an arbitration claim, even in the face of an express resolution of an administrative appeal or challenge.

d.- The resources and/or alternative judicial and/or arbitration remedies filed by the VPU will suspend the execution and effects of the acts issued by the enforcement authority. And,

e.- If the termination is revoked by a final judgment, the VPU will be granted the incentives that it would not have enjoyed due to the precautionary suspension eventually ordered. The suspended obligations will also be resumed.

Latest observations

It is essential that the regulations, on the one hand, guarantee the timely, technical and efficient exercise of the functions of the law enforcement authority and, on the other, that they do not impose in the future conditions of permanence in the RIGI that are very difficult for the VPU to comply with or that are unreasonable based on the authorized project and investment plan. 

For its part, it is suggested that the beneficiaries of the RIGI carry out a legal-economic risk mitigation analysis that takes into account future regulations of the law and procedural opportunities to make, in a timely manner, the corresponding requests in order to avoid future complications.

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1. See cases: DS 438, 444, 445 and 446.
2. Unlike what is established by Res. ME No. 511/2000 which regulates the Import Regime of Used Production Lines, benefiting from 0% Extra-Zone Import Duties.
3. This same criterion was later reproduced by the Supreme Court in the case “Procesadora de Boratos Argentinos SA (TF 28448-A) c/ DGA” (judgment of 19/11/2013, Rulings: 336:2209).
4. Likewise, depending on the case, the provisions of art. 208 must be taken into account: “…The benefits provided for in the RIGI may not be combined with incentives of the same nature existing in other pre-existing promotional regimes. However, adherence to the RIGI will not imply a waiver or incompatibility with other current and/or future promotional regimes with which incentives of a different nature may be combined that do not overlap, accumulate or repeat with the incentives provided for herein. For the purposes indicated in the last part of the previous paragraph, the restrictions provided for in article 32 of Law 24.331 on Free Trade Zones will not apply.…” This last rule provides: “…Free zone users will not be able to benefit from the tax benefits and incentives of the industrial, regional or sectoral promotion regimes, created or to be created, in the territory of the Nation.... ".
5. It would seem that the aforementioned subsection c) is intended to avoid the reproduction of situations such as those generated by the Martínez Raymonda Law - Law 26.351 - from the modifications introduced to Law No. 21.543.
6. However, let us remember that according to art. 169: “…Suppliers of goods or services with imported merchandise may request registration with the RIGI exclusively for the purposes of obtaining the incentives and rights provided for in art. 190 of this law with respect to merchandise, including inputs, that they import for the services they intend to provide to a VPU adhering to the RIGI. These incentives will apply exclusively to merchandise imported for the provision of goods or services to an adhering VPU, and may not be applied to merchandise intended to be used for other purposes. If the merchandise is imported for provision in favor of a VPU and the supplier cannot allocate said merchandise to the provision in favor of a VPU adhering to the RIGI, either because it has not been selected for a tender or because of termination of the contract that gave rise to the provision, or similar cause, the beneficiary supplier must inform the authority immediately and request the de-allocation of the destination of the merchandise before being able to use it for another destination.…”. Failure to comply with these obligations gives rise to the infringement provided for in art. 211, paragraph e), last part.
7.  Let us remember that the SCJN has pointed out that prescription is a general institute of law that must be governed by the provisions of the National Congress ("First Data Cono Sur SRL", Judgments: Volume 346. Folio 217).
8. Art. 215: Criminal action for violations of Article 211 punishable by a fine shall be extinguished by voluntary payment of the minimum fine that may correspond to the act in question.
9. Fine of five to fifteen percent of the minimum investment amount of inc.a) of art. 172 that is pending compliance.
10. The VPU that has certain knowledge of the impossibility of complying with any of the conditions and/or essential requirements for remaining in the RIGI, must inform the application authority within ten (10) business days after having such knowledge.¹² The firm and definitive resolution to cease incentives implies the automatic loss of the right to use all incentives after the effective date of cessation.
11. The firm and definitive resolution to cease incentives implies the automatic loss of the right to use all incentives after the effective date of cessation.