As of 30 August 2022, the Argentine Revenue Service (“ARS”) decided to suspend the Mandatory Disclosure Framework (“MDF”), which was created by the agency by means of general resolution no. 4838/2020, enacted in October 2020. Indeed, general resolution no. 4838/2020 established a mandatory disclosure framework for domestic and international tax planning arrangements aimed at producing a tax advantage or at avoiding a reporting obligation. According to the ARS, this disclosure framework was based on international precedents, such as the UK “Disclosure on tax avoidance schemes”, or the US “Office of tax shelter analysis”, among others. The European Directive on Administrative Cooperation 6 was also considered, despite being uncited. However, the Argentine MDF has actually broadened the reporting scope to domestic planning, and it is not limited to ‘aggressive’ tax planning structures.
The decision of the ARS to suspend the MDF was prompted by a series of court decisions that ordered either the temporary suspension of the regime – in the context of a preliminary injunction, prior to final ruling – or even the abrogation of such a regime on the grounds of its unconstitutionality. Among these rulings, the decision of the La Plata Federal Court issued last on 22 April 2022, which was favourable to the Professional Council of Economic Science Professionals of the Province of Buenos Aires (i.e. CPAs board), is worth highlighting. According to this ruling, the MDF is unconstitutional because it violates the legality principle of the Argentine Constitution, as it places an authentic public burden on the tax advisors without a proper legislative framework. In the court’s opinion, such a public burden would even compromise the professional-client privilege, which is actually protected by the law. Consequently, La Plata Federal Court considered that the MDF was enacted in the context of an unlawful legislative delegation of power to the ARS, and declared it void on constitutional grounds.
The La Plata Federal Court ruling was followed by other similar cases ruled upon likewise and, to date, the MDF is being litigated profusely by professional associations in all of the 24 Argentine jurisdictions. Under these circumstances, the ARS opted to suspend the MDF, first through general resolution no. 5254/2022, enacted on 30 August 2022, which suspended the regime for 60 days, until 31 October 2022; and then once again, through general resolution no. 5278/2022, enacted on 31 October 2022, which suspended the regime for another 60 days, until 2 January 2023.
The decision to twice suspend the MDF unveils that under the current judicial perspective, the ARS will face serious difficulties to enforce such a regime, and therefore, the future of the MDF, in its current version at least, remains uncertain.
Read the WTS Global International Corporate Tax Newsletter here.
