ARGENTINA Law and Practice Contributed by: Daniel Rinci, Tomas Cabanelas, Fernando García and Marisa Majul, Rinci & Asociados
generally follow OECD Guidelines, with five transfer pricing methods available: comparable uncontrolled price, resale price, cost plus, profit split, and transac - tional net margin method. The sixth method – a spe - cific rule for commodity transactions using publicly quoted prices on a reference date – is a notable fea - ture of Argentine law with no direct OECD equivalent and has been a significant source of controversy in the agribusiness sector. Controlled Foreign Corporation (CFC) Rules Argentina enacted specific and complicated CFC rules that entered into effect in 2019. Argentine resi - dents holding foreign interests must, in some cases, include their proportionate share of the foreign entity’s income in their Argentine taxable income on a current accrual basis, regardless of whether the income has been distributed. Some of the applicable parameters that may trigger this obligation are, among others: holding at least 50% participation in a foreign entity either directly or with relatives; effectively controlling the foreign entity; the foreign entity being subject to low taxation; or the foreign entity earning more than 50% of its income from passive sources. 5.3 Blacklists and Non-Cooperative Jurisdictions Argentina maintains a list of non-cooperative and low-tax jurisdictions for tax purposes. A jurisdiction is classified as non-cooperative if it has not entered into effective information exchange arrangements with Argentina. A jurisdiction is classified as low tax if its applicable corporate tax rate is less than 60% of the lowest Argentine corporate rate. Currently, this thresh - old applies where a jurisdiction’s corporate tax rate is lower than 15%. Transactions with entities located in non-cooperative or low-tax jurisdictions attract the following conse - quences: • interest payments are subject to higher withholding rates; • payments to service providers are generally non- deductible unless the taxpayer can demonstrate
the genuine economic nature of the service and its market price; • the CFC rules apply more broadly; and • certain anti-deferral rules come into effect for income channelled through such jurisdictions. 5.4 Reporting Obligations and Disclosure Regimes Financial Account Reporting (CRS/FATCA) Argentina has implemented the OECD’s Common Reporting Standard (CRS) for automatic exchange of financial account information and is an active partici - pant in the global CRS exchange network. Argentina also has an intergovernmental agreement (IGA) with the United States for FATCA compliance (under the Foreign Account Tax Compliance Act), according to which Argentine financial institutions report informa - tion on US account holders to local tax authorities for onward transmission to the IRS. The US also provides information to Argentina, although with a more limited scope. Treaty Network Several treaties provide for request-based tax infor - mation requests, which synergises with CRS/FATCA automatic reporting, often used by tax authorities to broaden the scope of information received automati - cally for tax assessments and criminal prosecution. 5.5 Role of Tax Authorities and Enforcement Measures Federal tax authorities hold wide power to investigate tax fraud, such as: • Access to books and records – Inspectors may require the production of accounting records, contracts, banking documents and any other documentation relevant to the determination of tax liability. Taxpayers are required to maintain records for a period of ten years. • Tax audits – Both desk audits and field audits are routinely conducted. Large taxpayers are subject to permanent oversight by a dedicated large taxpayer division. • Unannounced visits – In certain circumstances, inspectors may conduct unannounced visits to business premises to verify compliance with invoic - ing and registration obligations.
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