Argentina creates a law to promote investment in the automotive industry

Law 27686, enacted by Congress in September 2022, seeks to deepen the growth of Argentina’s automotive industry. To this end, the new regulation contemplates measures that promote investment, strengthen the value chain and generate an increase in skilled jobs, considering this sector a “Strategic Industry in the Argentine Republic” (Art. 4).

The new regulations seek to accentuate Argentina’s export profile in the automotive industry, optimize the integration of local auto parts, and promote the development and transfer of new technologies such as hybrid electric and hydrogen cell-based engines. All this is under environmental standards and the continuous improvement of vehicle safety.

One of the tax benefits for investments in the automotive sector is related to a reduction of the terms for the early refund of VAT (Value Added Tax): the refund term is reduced from six to three years and, in the case of the amortization of capital goods, from five to three years.
Projects approved under the new law will have a 0% export duty on the export of manufactured goods.

The law creates the Institute of Mobility as a non-state public law entity whose mission is to consolidate a sustainable productive ecosystem through the coordination of the different actors of the automotive sector.

Currently, the automotive sector in Argentina generates around 75,000 formal private jobs, in addition to 127,000 people employed in 4,700 supplier companies. It represents approximately 7% of the industrial GDP and 8% of the country’s exports.

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