Argentina: Mandatory Disclosure Framework and Transfer Pricing

On 20 March 2020, the Argentine Revenue Service enacted General Resolution No. 4838/2020 (the “Resolution”), which sets a mandatory disclosure framework for domestic and international tax planning arrangements aimed at producing a tax advantage or at avoiding a reporting obligation. This disclosure framework was enacted in the context and in accordance with Action 12 of BEPS and other international precedents, such as the UK “Disclosure on tax avoidance schemes” and the US “Office of tax shelter analysis”, but with a much larger reporting scope, given that it includes domestic tax planning arrangements and is not limited to “aggressive” tax planning.

For the international arrangements, the mandatory disclosure framework comprises any agreement, scheme, plan or any other action that results in a tax benefit or any other advantage to the taxpayer, which involves Argentina and one or more locations abroad. As regards the concept of “tax benefit or other advantages”, this is defined by the Resolution as any reduction in the taxable amount obtained by the taxpayer or any related party, be it directly or indirectly; including the avoidance to comply with a reporting requirement. Therefore, any tax scheme producing a “tax advantage”, under the terms of the Resolution, must be reported by the taxpayer and/or his/her tax advisors.

However, the Resolution also provides a list of specific transactions that must be reported as IA under any circumstances, regardless of whether a tax advantage occurred or not. Amongst them, we can find transactions involving non-cooperating jurisdictions or low/ null tax jurisdictions, which are also subject to the transfer pricing regulations set forth in the Income Tax Law. Said law provides that international transactions with counterparts located in these jurisdictions are deemed not to be arm’s-length, thus subject to transfer pricing analysis. This is a consequence of operating with counterparts in opaque locations.

The aforementioned situation implies an overlapping between the mandatory disclosure framework, the transfer pricing rules and other regimes and, therefore, a very complex regulatory framework for the taxpayers. Indeed, according to Argentine transfer pricing rules, counterparts domiciled in non-cooperating jurisdictions or low/null tax jurisdictions are deemed affiliated, thus subject to transfer pricing mandatory analysis. Following a number of Argentine Revenue Service investigations in early 2021, it looks like the Argentine Revenue Service is now expecting to have them reportable under the new information registry for tax planning schemes. The topic remains untested due to its novelty, but taxpayers should request advice to respond strategically, for they could otherwise set a complicated compliance standard, which could be hard to keep over time.

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