🌎 Can Argentina’s RIGI coexist with the OECD – OCDE GloBE rules? And if it can, would a transparent entity using RIGI qualify as a “resident” under Argentina’s tax treaties specifically because of the GloBE rules applied elsewhere?
📚 Tax Notes has published two very interesting articles in Tax Notes International this week. Though not immediately apparent, they share an interesting link with the OECD Pillar 2 GloBE rules and their application in the context of strategic tax incentives in developing countries.
✏️ One is the article authored by Fausto Geremia and Sebastián de la Bouillerie and titled “Unlocking Argentina’s RIGI Incentives: A Strategic Guide for Global Investors”. It is a very clear and detailed piece about the new Argentinian Incentive Regime for Large Investments (RIGI), with information about its (many) tax benefits and their promised stability for 30 years. You can find their article here: https://bit.ly/41NwRi5
💡 As said by the authors, although RIGI allows SPVs to pay the local corporate tax at a flat rate of 25% (instead of the progressive rates of 25% to 35%), its special exemptions and deductions can lower that to an ETR of less than 15%. If that happens, RIGI’s rules are structured in such a manner that they will not reduce the ETR to less than 15% (see Art. 196 of Law 27.742/2024), although in the absence of an Argentinian QDMTT it is unclear how that is going to be effectuated.
✏️ The other is the article authored by Valentin Bendlinger and titled “Does Pillar 2 Qualify Transparent Entities and PEs as Residents under Tax Treaties?”. This is a provocative piece in which the author discusses the impact of treating transparent entities and PEs as “constituent entities” under GloBE rules and, in that sense, payors of taxes that are not necessarily only emanating from sources within their place of creation/incorporation. You can find his article available here: https://bit.ly/4gqPcGk
💡 Bendlinger delves into the (progressively more controversial) field of how tax treaties can be used to neutralize some of the GloBE rules for treaty partners – irrespective of what the OECD might say about their compatibility or coexistence. Argentina has a modest but consequential tax treaty network, with some developed economies as its partners (e.g., Australia, France, Germany, the UK). It will be interesting to see the application of GloBE rules in the coming years (if not “in” Argentina, at least “in relation to” Argentina) and their ramifications when it comes to the interplay with existing tax treaties.
