ARGENTINA WINS CHILE WITH TAX INCENTIVES

AWS, the cloud services arm of Amazon is planning to invest $800 million in Argentina for the construction of a regional data center.

The new 10-year project has been an investment proposal for South America that got Chile and Argentina into a competition over housing the facility. It was reported last year that both the President of Argentina Mauricio Macri and the President of Chile Michelle Bachelet have held talks with Amazon few months earlier.

According to Bloomberg, Amazon’s decision to put its cloud infrastructure in Argentina is coming after the country’s government passed the Knowledge Economy Law earlier this year which promises tax incentives for tech firms moving into the country.

The new law will give companies such as AWS (Amazon Web Services) export tax breaks, an income tax reduction from 35% to 15% and lower labor costs.

“We consider the new law to be a major move forward, and it will have a notable impact on the industry. That law needed to be updated, and this is therefore a major step forward as it is for the long term and is not a short-term measure,” said Alejandro H. Ramírez, a Buenos Aires lawyer and partner at Highton, Marinelli & Ramírez, during an interview with analysis firm, Nearshore Americas.

“Argentina has a lot of talent and entrepreneurs, and there are many examples of big ideas coming out of the country, but the country needs venture capital investment, as there is still no culture of investing in startups in Argentina.”

That’s not all, the new data center facility will be located in the Bahia Blanca-Coronel Rosales districts of the province of Buenos Aires. This is a free-trade zone which lavishes generous benefits on AWS, as the company will not pay any national or provincial taxes on energy consumption.

On the other hand, proximity to an Amazon data center will help local companies reduce costs and improve data speed amongst other benefits. One of such beneficiaries is the country’s largest company MercadoLibre Inc., an e-commerce retailer which uses AWS to host its platforms.