Multinationals in Argentina Must Navigate Investment Incentives

Argentina is again in the international spotlight after a midterm victory by President Javier Milei, who earned more than 40% of the votes countrywide, which served as a referendum endorsing his pro-market libertarian agenda. Argentine stocks rose almost 50% on Oct. 27—the largest single-day surge since Milei was first elected in late 2023.

In less than two years, inflation has plummeted while a significant and chronic fiscal deficit was eliminated—including the deficits of state-run enterprises. Argentina’s Central Ban’s balance sheet was cleaned up by writing down overvalued assets and unwinding costly liabilities, without confiscating deposits or defaulting on external debt obligations.

The country also has secured unprecedented support from the Trump administration, including, among other measures, a $20 billion swap agreement and ongoing negotiations for a $20 billion financing package with leading US financial institutions.

These reforms and others have attracted considerable attention from major investors. OpenAI Inc. plans to launch Stargate Argentina with a $25 billion investment. YPF and ENI have agreed to invest $85 billion in the production and export of shale oil and gas over the next decade, amounting to approximately $300 billion in export value.

An investment of close to $20 billion is expected for the top copper mines in the country, including a massive Vicuña reservoir for which BHP and Lundin paid $4 billion last year and will invest a multiple of that number to develop it into one of the top 10 copper mines worldwide.

The Milei administration also has worked to reduce red tape and enhance government efficiency and is expected to advance a comprehensive package of tax and labor reforms through Argentina’s Congress after Dec. 10.

Tax advisers’ priorities in Argentina are clear: Mitigate foreign exchange and inflation exposure, optimize the tax cost structure, and avoid unnecessary tax risks—while positioning clients to benefit from a potential rebound in confidence and investment.

Foreign-Exchange Restrictions

Milei partially lifted foreign exchange restrictions. A full lifting of the remaining controls remains challenging unless a new monetary policy is adopted. The US Treasury’s assistance, together with a rise in exports—mainly from the oil, gas, and mining sectors—will help smooth the path toward eventual liberalization.

Still, attracting meaningful foreign direct investment to Argentina is difficult while there are still strict foreign exchange restrictions unless made under the large investment incentive regime known as RIGI.

In this environment, tax advisers play a key role in mitigating risk and adapting corporate structures and operations.

Phantom Income

Foreign exchange fluctuations and inflation adjustments remain central to Argentine tax planning. These can generate so-called “phantom income”—taxable gains that exist only on paper.

Companies that fail to anticipate these effects often face unpleasant surprises when filing annual income-tax returns. Designing strategies to hedge or mitigate these variations has become a top priority in tax departments.

Tax Loss Adjustment

Many companies are shifting from a defensive to an offensive position by challenging the tax authority’s stance that losses carried forward cannot be adjusted for inflation.

Citing Supreme Court precedents that declared such prohibitions unconstitutional when tax results become confiscatory, taxpayers are testing strategies to index accumulated losses. Parallel efforts are also under way to update fixed deduction limits for expenses, amortizations, and depreciations in line with inflation.

Transfer Pricing Transactions

Transfer-pricing policies are also being revisited. Many multinationals had ignored foreign exchange risk when setting benchmarks—an omission that now is being corrected.

Due to previous payment restrictions, numerous companies stopped charging their Argentine subsidiaries for intercompany services such as royalties, technical assistance, or trademark use, creating inconsistencies with the Organization for Economic Cooperation and Development’s transfer pricing principles.

With payment flows gradually normalizing, companies are reinstating intercompany agreements at arm’s-length conditions.

A Regional Platform

Argentina has drawn interest from companies seeking to navigate US trade restrictions, leveraging potential customs advantages in exporting to the US.

Meanwhile, the country continues to attract offshoring services within large multinational corporate groups. US companies increasingly use Argentina as a hub for shared services under cost-plus arrangements.

These entities also may qualify for benefits under the knowledge-based economy incentive regime. Although no longer a low-cost destination, Argentina remains cost-efficient and tax-competitive for high-value services.

Local Tax Pitfalls

This is an area that often receives insufficient attention. Argentina’s federal structure features three layers of taxation—federal, provincial, and municipal.

As federal transfers to lower jurisdictions shrink, provinces and municipalities have responded by aggressively creating new taxes, raising existing rates, and expanding advance-payment regimes. Several provinces also have begun applying discriminatory tax rates to goods manufactured in other provinces, triggering a wave of litigation across the country.

Foreign Currency Access

Under tight foreign exchange controls, many companies have adopted alternative structures to make payments outside the official foreign exchange market. While these mechanisms often imply an effective conversion rate higher than the official rate, they can provide a practical workaround to meet payment obligations.

Such arrangements must be carefully designed to avoid triggering taxable gains or non-deductible losses.

Incentive Regimes

Argentina currently offers two key investment incentive frameworks: the Knowledge-Based Economy Regime and RIGI.

The first has been in place for several years and primarily applies to service and technology sectors. The newly enacted RIGI, by contrast, targets large-scale projects in oil and gas, energy, manufacturing, and mining, with investments in excess of $200 million to be deployed within two years from the government’s approval. RIGI, however, is due to expire on July 8, 2026.

Tax advisers are increasingly helping clients navigate these frameworks to secure the benefits available under each regime whenever possible. After the midterm elections—and with continued backing from the US Treasury—it’s not yet clear whether the Milei administration will succeed in finally taming inflation and dismantling foreign exchange controls.

In the meantime, inflation and foreign-exchange restrictions remain the most harmful symptoms of an illness Argentina is still struggling to cure. While these symptoms persist, tax advisers should focus on preserving clients’ assets and implementing strategies that take advantage of Argentina’s current opportunities—while looking ahead to a more stable future.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Augusto Nicolás Mancinelli is head of DLA Piper’s tax and customs department.

Marcelo Etchebarne is managing partner of DLA Piper Argentina.

Write for Us: Author Guidelines