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Tax incentives for the hospitality sector

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Tourism is one of the most up-and-coming industries of Buenos Aires City in terms of growth potential. Through investBA and ENTUR agencies, the City has launched a tax-incentive program to encourage and promote the development, construction, remodeling and expansion of Buenos Aires-based hotels, with a view to boosting the city’s hotel capacity. 

Get to know more about the rules and regulations in force, the tax benefits offered and how to apply for them.

Tax incentives for hotel businesses located in the City of Buenos Aires:

New hotel construction: 

  • Businesses that develop new hotel facilities are eligible to apply for benefits of up to 50% of the investment to be made, in the form of tax credit applicable against gross income tax. Any credit balance may be carried forward and applied against tax liability for a term of 15 years or until said tax credit is applied in full, whichever happens first (for projects submitted before 31 Dec 2021*). In the highest benefit range, the bill offers beneficial treatment for small or middle-sized enterprises undergoing construction of new facilities, or for projects with specific features such as their location within strategic neighborhoods on the City of Buenos Aires, or their choice to revamp and invest in buildings protected under the City’s heritage laws. 

  • Furthermore, all businesses building new hotel facilities will be eligible for ABL (property-related) tax payment deferral until completion of construction works. If all other requirements are met and the hotel is granted final license to operate, said business will be eligible for ABL-exemption.

Benefits according to location:

Application process for businesses building new hotel facilities:

Remodeling and expansion of pre-existing hotels:

  • Hotel businesses who remodel, expand or introduce improvements to their facilities will be eligible to apply for a benefit of up to 60% of the expended investment in the form tax credit applicable against income tax obligations. In these cases, the bill stipulates a maximum term of 3 years for completion of works, with tax-credit carryforward for 10 years or until said tax credit is applied in full, whichever happens first. 

  • In the highest benefit range, the bill offers preferential treatment to small and middle-sized enterprises and projects with features such as the choice to revamp and invest in buildings protected by the City’s cultural heritage laws.

Application process for businesses remodeling pre-existing hotel facilities:

New joint resolution:

The City of Buenos Aires recently issued a Resolution to reduce the minimum amounts established between 30% and 66% depending on the hotel category, in addition to giving hotel establishments the possibility of presenting a single investment project without a minimum amount for the adaptations in infrastructure that they have to implement in order to apply the COVID-19 protocols (not applicable for a 50% reduction as of the second project).

The new minimum investment amounts, per room, for remodelling hotels and modifying projects already underway are now as follows: for one-star hotels, this is reduced by 66%, to $15,000 per room; two and three stars, 50% less, to $22,500; four stars, 50%, to $45,000 per room; and the five stars, 30%, to $126,000 per room.

How to apply for benefits:

The projects can be submitted via Buenos Aires City’s Distance Electronic Processing Platform (TAD).

Rules and regulations in force:

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