INDUSTRIAL PROMOTION Law 26.457 Please refer to the incentive regime for local investment for the manufacture of motorcycles and motorcycles. Sanctioned: December 10, 2008 promulgated: December 15, 2008

The Senate and Chamber of Deputies of the Argentine Nation assembled in Congress, etc. sanction with force of Law:

REGIME OF INCENTIVE TO THE LOCAL INVERSION OF MOTOCLATES AND MOTOPLES

PART I

CHAPTER I

Definition and scope of the regime

ARTICLE 1 Consider the incentive regime for local investment for the manufacture of motorcycles and motorcycles, by which the non-exclusive benefits provided for in Titles II and III of this Law are established.

ARTICLE 2 The present regime may be accessed by natural persons domiciled in the Argentine Republic and/or legal persons constituted therein, or who have been authorized to act within their territory in accordance with their laws, duly registered in accordance with them, which have industrial establishment based in the national territory for the manufacture of motorcycles, other vehicles included in Article 28 of Annex I to Article 1 of Decree No. 779 of the preceding motors The companies shall also have a request for accession approved by that authority.

CHAPTER II

Regime requirements

Article 3 In order to adhere to this regime, companies shall submit for approval by the implementing authority, a production plan and an import and export programme.

Beneficiaries shall credit or commit investments not less than one million US dollars (USD 1,000,000), in all or some of the following paragraphs:

(a) In fixed assets;

(b) In properties and facilities directly related to the productive process set out in the plan;

(c) Capital assets or their financing for the development of local motorcycle suppliers.

For the purposes set out in this article, the national executive branch shall establish the date from which investments may be considered and the period during which they shall be affected to the project.

ARTICLE 4 Projects may be submitted for the production of new models of vehicles covered by Article 2 of this Law and/or new engine models for such vehicles, as well as projects relating to vehicles covered by the same Article and/or motors for such vehicles in commercial production at the time of entry into force of this Law.

In all cases, the proposed production plan should provide for a progressive national integration programme.

Imported motorbikes may represent up to fifty percent (50%) of the ex-factory value prior to the taxes of the vehicles covered by Article 2 and the engines for such vehicles during the first year of the approved plan, according to the formula specified in Article 5 of this rule.

From the second year of the approved plan, the maximum content imported according to the formula established in Article 5 of this Law shall be:

Year 2: forty-five percent (45%).

Year 3: forty percent (40%).

Year 4: thirty-five percent (35%).

Year 5: thirty percent (30%).

Annual increases in national integration to be carried out as a result of the above-mentioned requirements must be ineffective in replacing components imported by nationals.

Both the previous scale on the maximum imported content, as well as the five (5) years of tariff treatment provided for in Title II and the benefits provided for in Title III, will begin to be computed on the basis of the production plan, as approved.

ARTICLE 5o The maximum imported content of vehicles under Article 2 of this measure and the engines for such vehicles, as indicated in the previous article, shall be measured for each model incorporated into the programme, in accordance with the following formula:

CMI =	CIF value of imported motorcycle parts x 100
	value of the final good ex factory before tax

For the CMI calculation, the maximum imported component, the regulation will establish maximum percentage limits computable for items that intervene in the value of the ex-factory final good before taxes and that do not correspond to parts, parts, subsets, assemblies and motorcycle parts.

The implementing authority will require the beneficiaries of this regime to invoice the suppliers of local parties, being their mandatory presentation by the beneficiaries in order to corroborate the national origin of the parties, parts, subsets, assemblies and motorcycles.

ARTICLE 6 Presentations by interested companies will be evaluated in their technical and economic feasibility and feasibility, after which the implementing authority must be issued on a substantial basis, approving or disapproving applications.

PART II

Tariff treatment

ARTICLE 7 The tariff treatment set out in this title shall consist of a reduction in tariffs during the first five (5) years of the project, as charged by the enforcement authority, of:

(a) Sixty per cent (60%) of the extrazone import right for parts, parts, subsets, assemblies and motorcycle parts for the production of vehicles covered by Article 2 of this Law, and motors for such vehicles (excluding in all cases parts, parts, subsets, assemblies and motorcycle parts for the replacement market);

(b) Up to forty percent (40%) of the extrazone import right for "Completely Knocked Down (CKD)" and "Semi Knocked Down (SKD)" of vehicles covered by Article 2 of this Law, complete or incomplete;

(c) Up to twenty percent (20%) of the extrazone import right for vehicles covered in Article 2 of this complete and armed law "Completely Built Up (CBU)".

Subparagraphs (b) and (c) shall apply only to enterprises that submit production plans for the manufacture of vehicles covered by Article 2 of this Law.

The application authority shall establish the goods that may be imported with the tariff treatment described in this article, drawing to this effect a list with its corresponding tariff positions of the Common Nomenclature of Mercosur (NCM).

ARTICLE 8 The treatment agreed in this title shall be implemented by issuing the corresponding certificates for import with the tariff derogation provided for in the preceding article, in accordance with the production plans and the import and export programmes to be developed approved by the application authority, according to the following criteria:

(a) When the destination of the production established in the approved plan is the local market, the aforementioned certificates will be issued for imports of goods of a total value equal to fifty per cent (50%) of the ex-factory value prior to the taxes of the production of vehicles mentioned in Article 2 of the present law completed and/or motors for those vehicles completed the first year of the approved program; up to forty-five per cent (45%) the second; up to forty per cent (40%)

(b) When the destination of production is exclusively for the export market, additional 20 per cent (40 per cent) will be issued for each year, at the scale provided for in subparagraph (a) of this article.

Article 9 The certificates provided for in this title will be intransferable and will be valid for one (1) year from the date of issuance.

The enforcement authority shall establish the periodicity with which the certificates shall be issued. Certificates may not be issued with value exceeding that corresponding to a period of six (6) months of projected production, in accordance with the production plan in due course.

ARTICLE 10. The implementing authority shall monitor the performance of the beneficiary on the basis of the approved production plan, investments and exports, setting them appropriate adjustments in the issuance of import certificates with tariff degradation, in accordance with the procedure established by that authority. This, without prejudice to the sanctions that may correspond.

PART III

Fiscal voucher on local motorcycle purchases

ARTICLE 11. A benefit consisting of the perception of a tax bond on the value of the purchases of the parts, parts, subsets, assemblies and motor parts, local matrices and moulds for the local production of the vehicles covered by Article 2 and/or motors for such vehicles, which are acquired by the companies that adhere to the regime in accordance with Title I of this Law.

The aforementioned tax bond shall be nominative and non-transferable, and shall apply to the payment of national taxes, except for those levies for social security or specific affectation.

In no case shall the fiscal bond be applied to the payment of debts prior to the effective approval of the project, nor shall any balances in favour result in refunds and returns by the national State. The amount of the bonds received will not be computed for the determination of the tax on profits.

Please provide the National Executive to establish the taxes that may be cancelled with the fiscal bond established in this article.

ARTICLE 12. The amount of the benefit agreed in the preceding article shall be equivalent to a percentage of the ex-factory value prior to the tax of the parts, parts, subsets, assemblies and motor parts, local matrices and moulds that are intended for the production of the vehicles covered in Article 2 of this norm and/or motors for such vehicles, and comply with the conditions established by the implementing authority. The applicable percentage shall be determined on the basis of the period in which the five-year production plan for the benefit is developed, as follows:

Tax bonds shall be issued on the ex-factory value of the parts, parts, subsets, assemblies and motorbikes, local matrices and moulds, net of the added value tax (VAT), financial expenses and discounts and bonuses.

The benefits provided for in this title and those agreed upon by Decree 379 of 29 March 2001, their modifications and any regime that replaces it, are mutually exclusive in respect of the same good.

ARTICLE 13. The implementing authority shall establish the goods subject to profit, for this purpose preparing a list with its corresponding tariff positions of the Common Nomenclature of Mercosur (NCM).

ARTICLE 14. . In the case of motorcycles that, with inputs owned by the companies producing the vehicles covered by Article 2 of this Law and/or motors for such vehicles, are subject to a process of industrialization by third parties, the benefit granted will be computed on the value of the process of industrialization, tax-free and excluded the value of the inputs owned by the beneficiary companies.

ARTICLE 15. . Vehicle-producing companies covered by Article 2 of this Law and/or motors for such vehicles may apply to the implementing authority for the benefit provided for in this title to the extent that they have accredited the purchase and receipt of the goods, in accordance with the procedure established by that authority.

PART IV

Sanctions

ARTICLE 16. Failure to comply with the provisions of the present law shall result in the application of the following sanctions, without prejudice to those which may apply to other existing rules:

(a) Suspension in the enjoyment of profit, for a period of between two (2) months and one (1) year;

(b) Fines up to one hundred and fifty percent (150%) of the profits given to the company in the calendar year immediately prior to non-compliance. In the event that no profits had been granted to the company during that year, fines will be applied to the above-mentioned percentage, with respect to the benefits requested by the company during the year of non-compliance and even the occurrence of the company;

(c) Revocation of the benefit granted;

(d) Payment of import duties at full rate to be paid, with more interest and accessories;

(e) Payment of national taxes to which tax bonds have been applied, with more interest and accessories;

(f) Disqualification to enjoy the benefits of the regime.

ARTICLE 17. The delay in the submission of the required information, inaccuracy or omission, or other breaches of the obligations set out in this Act and the regulations that are issued, to the extent that this did not have caused disbursements by the national State, will be considered a minor lack.

ARTICLE 18. They will be considered serious faults:

(a) Failure to submit the required information, to the extent that it had motivated the granting of benefits under this law;

(b) The untruth or inaccuracy of the information presented, to the extent that it implies that a company is unduly entitled to any of the benefits of the regime,

(c) Significant deviations from the production plan and/or the approved import and export programme, in accordance with the criteria established by the regulation.

ARTICLE 19. In light of a misdemeanour, the enforcement authority may, after an intimation of the duty in question, apply the penalties provided for in article 16 (a) and (b) of this Act. The application may be made jointly or alternatively, without the amount of the fine provided for in article 16 (b) of this law exceeding fifty per cent (50%) of the profits received by the company in the immediately preceding calendar year. The graduation will be carried out according to the amount of profit and background in the compliance of the company's regime.

ARTICLE 20. In the face of a serious offence, the enforcement authority may apply, jointly or alternatively, the penalties provided for in article 16 (b), (c), (d), (e) and (f) of this Act. The graduation shall be carried out in accordance with the amount of profit, the severity of non-compliance and the company's record in the performance of this regime.

ARTICLE 21. Without prejudice to the sanctions that may be appropriated by the application of articles 16 to 20 of this law, in the event of the detection of serious signs of irregularities, prior to the intention of the company, the preventive suspension of the granting of the benefits provided for in the present regime shall be determined until it is determined whether it has violated the beneficiary.

PART V

General provisions

ARTICLE 22. Please note in five (5) years from the entry into force of the regulations for this regime, the time limit for interested companies to apply for incorporation.

ARTICLE 23. The verification of the value of the parts, parts, components, subsets, assemblies and vehicles will be based on the valuation criteria implemented by the Directorate General of Customs, which is dependent on the Federal Public Income Administration, autarchical entity within the Ministry of Economy and Public Finance.

ARTICLE 24. The enforcement authority shall regulate the audit process of this regime.

The assistance of national universities or other public bodies may be requested to carry out the verification and counter-reference tasks.

ARTICLE 25. The cost arising from the verification and counter-reference activities of the operator of this regime shall be borne by the respective beneficiaries, in the terms and conditions established by the implementing authority.

ARTICLE 26. The regulation shall establish the guarantees to be established by the companies concerned for the perception of the benefits provided for in this law and the manner of enforcement of the same in case of non-compliance.

ARTICLE 27. Companies shall facilitate the inspections or verifications ordered by the enforcement authority and provide it as an affidavit within the time limit that it sets out any information required by them on any matter related to this law.

ARTICLE 28. Property produced in the province of Tierra del Fuego, Antarctica and South Atlantic Islands will be excluded from this regime under Act No. 19,640.

ARTICLE 29. In the case of vehicles manufactured in the country in accordance with the requirements set out in this law, which in turn contain engines subject to the benefits agreed upon by it, for the purpose of calculating the benefits applicable to these vehicles, the value of the aforementioned engines must be detracted.

ARTICLE 30. The treatment provided by the present regime may not be accommodated in any of the following situations:

(a) Declared in a state of bankruptcy, for which the continuity of exploitation has not been provided, in accordance with Laws 19.551 and its amendments, or 24.522, as appropriate;

(b) Complaints or complaints by the Directorate-General for Impositives, under the Federal Public Income Administration, on the basis of Laws 23,771 and its amendments or 24,769, as appropriate, in respect of which the corresponding tax requirement for lifting to trial has been formulated before the approval of the project is issued;

(c) Complaints formally or criminally filed for ordinary offences that have connection with the failure to comply with their tax obligations or that of third parties, in which respect the corresponding tax requirement for lifting to trial has been formulated before the approval of the project is issued;

(d) The legal persons sincluded the cooperativess in which, as appropriate, their partners, administrators, directors, trustees, members of the monitoring board, advisors or those holding equivalent positions in them, have been formally denounced or criminally charged for common crimes that have connection with non-compliance with their tax obligations or that of third parties, in which respect the corresponding tax requirement for lifting to trial has been formulated prior to issuing the bill.

The occurrence of any of the circumstances referred to in the preceding paragraph, produced after the approval of the project, will be a cause of complete expiry of the agreed treatment.

Persons who are beneficiaries of the present regime shall previously waive the promotion of any judicial or administrative proceedings in connection with the provisions of Decree 1043 of 30 April 2003 or to claim for tax purposes the application of updating procedures whose use is prohibited under the provisions of Act No. 23.928 and its amendments and article 39 of Act No. 24.073 and its amendments. Those who, at the time of entry into force of this law, have already promoted such processes, must desist from the actions and rights invoked in them.

ARTICLE 31. The national executive branch shall designate the authority for the implementation of this regime.

Such authority shall establish the complementary rules for the operation of the regime, in accordance with the regulation of this law which is issued by the national executive branch.

ARTICLE 32. The provisions of Act No. 11,683 and its amendments and Act No. 22,415 (Customs Code) and their amendments shall apply in the areas not provided for in this Act.

ARTICLE 33. The tax rate of benefits to be granted by this regime shall be set annually in the general budget law of the national administration.

ARTICLE 34. Invite the provinces, the Autonomous City of Buenos Aires and the municipalities to adhere to the promotional criterion of this law through the dictation of promotional norms for the local production of the vehicles covered by Article 2 of this Law and of motoparts.

ARTICLE 35. Contact the Executive.

DADA IN THE SESSION OF THE ARGENTINE CONGRESS, IN GOOD AIRES, TO THE TWENTY DAYS OF THE YEAR TWO MIL OCHO.

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JOSE J. B. PAMPURO. EDUARDO A. FELLNER. . Enrique Hidalgo. . Juan H. Estrada.