Argentina

Transfer Pricing Regulations in Argentina

Transfer pricing rules in Argentina are primarily governed by the Income Tax Law (“LIG”) and its respective amendments, and are supplemented and regulated by Decrees and General Resolutions, including Decree 1344/98, as well as General Resolution No. 1122, General Resolution 3132/2011, General Resolution 3476/2013, Law No. 27430, Article 6, and Decree 1170/2018.

The transfer pricing rules establish that an entity resident in Argentina must determine the arm’s-length prices for international transactions entered into between taxpayers and related parties domiciled abroad and/or with entities incorporated or based in non-cooperative jurisdictions or jurisdictions with low or no taxation.

Furthermore, through General Resolution 4130-E, published in the Official Gazette on September 20, 2017, the Federal Public Revenue Administration (AFIP) implemented a new annual reporting regime related to multinational groups, known as the Country-by-Country (CbC) Report; which forms part of the international guidelines of Action 13 of the BEPS (Base Erosion and Profit Shifting) Action Plan.

As a member of the G20, Argentina is one of the Latin American countries that have supported the goals of the OECD’s BEPS Action Plan; In this regard, the Federal Public Revenue Administration (AFIP) published General Resolution 4717/2020, which specifies the provisions related to informative tax returns, the Local File, Master File, and Country-by-Country (CbC) Report.

Transfer Pricing Rules in Argentina

Transfer pricing provisions in Argentina are primarily governed by the Income Tax Law (“LIG”) and its respective amendments, and are supplemented and regulated by subsequent decrees and general resolutions, notably Decree 1344/98, as well as General Resolution No. 1122, General Resolution 3132/2011, and General Resolution 3476/2013

Article 11 of the Regulations establishes that a related-party relationship exists when any of the following situations occur:

• One entity owns all or a majority of the capital of another.

• Two or more entities have a common entity that owns all or a majority of the capital stock of both, or that owns all or a majority of the capital stock of one or more entities and has significant influence over one or more entities, or has significant influence over both.

• An entity holds the votes necessary to make decisions.

• When two or more entities have directors, officers, or managers in common.

• There is an exclusive agent, distributor, or dealer.

• One entity is the provider of technological property or technical know-how that is essential to the other entity’s operations.

• An entity that, together with another, participates in a partnership, joint venture, co-ownership arrangement, or other similar arrangement without legal personality and has significant influence over pricing.

• When one entity agrees with another on preferential terms that differ from those stipulated with third parties under similar circumstances.

• A party participates significantly in the setting of business policies.

• The party engages in a relevant activity solely with another party, or its existence is justified only in relation to another party.

• A party provides, through mutual agreements or the granting of guarantees, substantial funds for the other party’s business activities.

• One entity covers the losses of the other.

• When the management of an entity is entrusted to someone who holds a minority stake in its capital.

Formal Obligations: Informative Affidavits

Pursuant to Article 5 of General Resolution No. 1122, the entities required to comply with the Transfer Pricing Regime and, therefore, to maintain supporting documentation are those that:

• Conduct transactions with related persons or entities incorporated, domiciled, established, or located abroad.
• Conduct transactions with individuals or legal entities domiciled, incorporated, or located in low- or no-tax countries, regardless of whether a related-party relationship exists.
• Are residents of the country and conduct transactions with permanent establishments owned by them and located abroad.
• Are residents of the country and owners of permanent establishments located abroad, for transactions carried out by such establishments with related individuals or other types of entities domiciled, incorporated, or located abroad, when the penultimate paragraph of Article 8 of the LIG applies.

Filing of the Affidavit: Pursuant to Article 48, the parties listed in Article 2 must report the details of their international transactions by filing Affidavit Form F. 2.668. To do so, they must access the “International Transactions and Transfer Pricing” service available on the institutional website (http://www.afip.gob.ar), using the respective “Tax ID” with a Security Level of at least 3, obtained in accordance with the procedure set forth in General Resolution No. 3,713 and its amendments.

The affidavit must be filed whenever the amounts specified below—depending on the type of transaction in question—are exceeded:

• Imports and exports of goods between independent parties whose total annual value for the fiscal year exceeds TEN MILLION PESOS ($10,000,000).
• Transactions governed by transfer pricing regulations, in cases where all of the taxpayer’s transactions subject to this regime, considered collectively for the tax period, exceed THREE MILLION PESOS ($3,000,000) or, individually, THREE HUNDRED THOUSAND PESOS ($300,000).

Transfer Pricing Study or Local Report: Pursuant to Article 44 of AFIP General Resolution No. 4717/2020, taxpayers are required to file a Transfer Pricing Study (Form F. 4501) when the following conditions are met:

• Taxpayers who conduct transactions with related parties, when the total value of their transactions with such related parties during the fiscal year exceeds the total amount equivalent to THREE MILLION PESOS ($3,000,000.) or an individual amount of THREE HUNDRED THOUSAND PESOS ($300,000.-).

• Taxpayers who record transactions with parties domiciled, incorporated, or located in non-cooperative jurisdictions or jurisdictions with low or no taxation, provided that the transactions covered by this regime, when invoiced in the aggregate during the fiscal period, exceed the total amount equivalent to THREE MILLION PESOS ($3,000,000.-), or an individual amount of THREE HUNDRED THOUSAND PESOS ($300,000).

Master Report: Pursuant to Article 45, taxpayers belonging to the groups defined in point 2 of Annex I of General Resolution No. 4,130 and its amendments must file the “Master Report,” containing the information required in Annex II, for the purpose of providing general information on the composition of the group referred to in the aforementioned point 2, when all of the following circumstances are met:

• The group’s total consolidated annual revenue exceeds FOUR BILLION PESOS ($4,000,000,000) in the fiscal year preceding the filing; and

• Transactions with related parties abroad exceed, in aggregate for the fiscal period, the amount equivalent to THREE MILLION PESOS ($3,000,000) or, individually, THREE HUNDRED THOUSAND PESOS ($300,000).

If there are no changes during the reporting period with respect to the information provided in the most recent Master Report filed, reporting entities may choose to submit, in lieu thereof, a sworn statement confirming the information provided in the most recent Master Report filed, along with the documentation specified in Section 5.1 of Annex II hereto.

The aforementioned “Master Report” and the confirmation letter, as applicable, must be signed by the taxpayer’s or responsible party’s legal representative and submitted by logging in with a tax ID on the institutional website (http://www.afip.gob.ar) to the “Digital Filings” service, under the “Transfer Pricing – Master File Submission” option, as provided for in General Resolution No. 4,503, as amended and supplemented.

Country-by-Country Report: This report is intended for entities with tax residence in Argentina that belong to an MNE Group (multinational enterprises), provided they meet the following conditions:

• It is the controlling entity of the multinational group;
• It has been designated as a substitute entity by the group’s controlling entity; or
• If: (1) the controlling entity is not required in its tax jurisdiction to file the country-by-country report; or (2) if it is required to do so, but that jurisdiction does not have an agreement with Argentina to exchange information related to said report; or (3) even if such an agreement has been signed, the other jurisdiction systematically fails to fulfill its obligations to exchange information.

Multinational Enterprise (MNE) Groups are excluded from this regime if their total consolidated annual revenue—as reflected in their consolidated financial statements and attributable to the fiscal year preceding the fiscal year to be reported—is less than SEVEN HUNDRED FIFTY MILLION EUROS (€750,000,000.00) or its equivalent converted into the local currency of the tax jurisdiction of the ultimate controlling entity.

Deadline for Filing Annual Affidavits.

With regard to general filing deadlines, starting with fiscal years ending in December 2019, these will fall in the 6th and 12th months following the end of the fiscal year for international transactions and transfer pricing, and for the master file, respectively.

Accordingly, the Transfer Pricing Study and Form 2668 must be filed by the sixth month following the fiscal year-end, based on the last digit of the C.U.I.T.

The Master File and Country-by-Country Report must be filed by the twelfth month following the fiscal year-end, based on the last digit of the C.U.I.T.

Penalties for Noncompliance

Failure to file the tax return within the deadline established by the AFIP is punishable by a fine of $10,000 to $20,000—3rd paragraph of Art. 38.1, as incorporated by Law 25,795—if the taxpayer is a trust, association, or entity of any kind incorporated in the country (no prior notice is required). This fine does not provide for any mitigating circumstances in the event of late compliance or voluntary payment. The fine is equally applicable if the taxpayer files only the tax return without the transfer pricing report; however, in this case, there is established legal doctrine holding that the fine could be that provided for in Article No. 39 —first paragraph—of Law 11,683, which ranges from $150 to $2,500.

Failure to file the tax return and the transfer pricing report after a request by the AFIP is punishable by a fine of up to $45,000—Article 39, second paragraph. This fine is cumulative with the one described in the previous point. Finally, in the event that AFIP reiterates the request and the taxpayer again fails to submit the required documents, and furthermore, has transactions with a gross annual amount equal to or greater than $10,000,000, the taxpayer will be subject to another fine with a minimum of $90,000 and a maximum of $450,000—Article 39.1, paragraph 4.

Likewise, failure to retain documentation is punishable by a fine ranging from a minimum of $150 to a maximum of $45,000 (Article 39 of Law 11,683).

Failure to comply with the country-by-country reporting regime, as well as the supplementary regime, will result in the penalties provided for in Article 38 and in the provision incorporated immediately following Article 38 of Law No. 11,683 on Tax Procedure. Furthermore, the AFIP is authorized to (i) classify the taxpayer into a higher-risk category for tax audits; (ii) suspend or exclude the taxpayer from the Special Tax Registers; (iii) suspend the processing of Certificates of Exclusion or Non-Withholding requested by the taxpayer.