Wedoany.com Report on Feb 7th, The cost structure of Argentina's mining sector has undergone a significant change due to the termination of the "PAIS" tax (Tax for an Inclusive and Solidary Argentina). This tax, established in December 2019 and originally set for five fiscal years, officially ended in January 2026. For the mining sector, this adjustment is not merely an administrative change but signifies a reconfiguration of investment project competitiveness and cash flow structures.
Financial expert and investment advisor for SJB SA and Idóneo CNV, Anabel Recabarren, analyzed for *Steel and Rock* that eliminating the PAIS tax directly impacts initial capital requirements and local supply chain relationships. She stated: "This measure creates a more competitive environment for mining investment in Argentina, removing the burden that distorted the real value of inputs."
The PAIS tax was initially set to expire in December 2024 but was later adjusted and extended to the end of 2025. In the second half of 2025, a special refund procedure was implemented for taxes paid during the 2023-2024 period, especially covering previously unaccounted import cases. Companies importing mining goods could recover part of the funds through tax credits or refunds. With the final cancellation of the tax in January 2026, the mining sector entered a new regulatory phase.
The most direct impact for operators is a reduction in import costs. Previously, the tax rate was 17.5% of the import value, significantly increasing the cost of technology and equipment procurement. As Argentina's mining relies on foreign technology, ending this additional cost brings budgets closer to actual international market levels. The lower entry price for goods allows companies' financial planning to adapt to more reasonable international values, which is particularly important for projects dependent on imported inputs.
The tax burden on initial investment (i.e., capital expenditure, CAPEX) is one of the key challenges in launching mining projects. Reduced tax pressure leads to a decrease in the required startup capital, directly impacting a company's financial health. Recabarren explained: "Companies pay less when importing goods, optimizing cash flow by avoiding advance payments and taxes related to the PAIS tax. This avoids prepayments and tax expenditures, ultimately resulting in better returns for project investors."
The cancellation of the PAIS tax is not an isolated measure; it synergizes with long-term incentive tools like the Large Investment Incentive Regime (RIGI). RIGI aims to provide 30 years of fiscal stability, but its application is not universally applicable to all current projects. The disappearance of the tax as an immediate financial relief enhances the benefits of this regime. The two are fully complementary: RIGI provides stability, while eliminating the national tax reduces initial investment costs, allowing projects to proceed under better financial conditions.
The local value chain is expected to receive substantial benefits. While the tax was in effect, domestic suppliers wishing to supply imported goods to mining companies faced dual obstacles of lengthy bureaucratic procedures and tax payment obligations, significantly squeezing profit margins. Starting January 2026, suppliers can enhance their inventory capacity. Eliminating the financial cost makes it easier for local suppliers to procure high-demand goods. For mining companies, sourcing from local suppliers with available inventory is more efficient than initiating direct import processes, optimizing project timelines.
Although country risk remains an analytical factor, the simplification of the tax system is welcomed by international markets. Eliminating this tax burden, combined with the implementation of RIGI and the trend of removing foreign exchange restrictions, shows Argentina aligning with global mining regions like Chile and Australia.
Financial analysis also points out obstacles that still need to be overcome. Experts believe the core issue lies in the lack of clear rules and unalterable guidelines. Guaranteeing that companies can repatriate profits over time is crucial. Recabarren emphasized: "What investor would be willing to invest in a project that prevents subsequent profit extraction? This defies all financial logic."
The definition of local taxes remains to be clarified. Unalterable guidelines need to be established regarding provincial and municipal taxes, as well as the treatment of profit tax and VAT credit balances. Eliminating the PAIS tax is a fundamental step in alleviating the current burden of companies having to budget in both pesos and dollars.
